FIN 3010 CASH BUDGET ASSIGNMENT QUESTION ONE Kupa Ltd. has approached their local banker for an overdraft facility in 2021. The banker has asked to provide a cash budget for the first six months of 2021. The company has furnished you with the following information. Sales (Sh.'000') 44 4 Oct Nov Dec. Jan. Feb. Mar. Apr. May June July Aug. Aug. Sep 2020 2020 2020 2021 2021 2021 2021 2021 2021 2021 2021 2021 190 170 200 180 220 240 210 160 180 220 240 220 Sales are made 40% cash. Of credit sales, 30% is collected in the month of sale, 40% one month after sale and 25% two months from sales Gross profit margin is 25%. Goods purchased in a month are sold two months after the month of purchase. Purchases are paid 30% one the month of purchase and the remainder two months thereafter. Cash Overheads average 10% of the monthly sales. Cash Operating expenses are 15% of the monthly sales. New equipment costing Sh. 24,000 will, be purchased for cash in April. Annual depreciation on this equipment will be 25% of the cost. Tax payments for Sh 40, 000 each month are due in January and March. The beginning cash balance in 2021 is expected to be Sh 250,000. This cash balance has to be maintained. In case of deficits, borrowing in multiples of Sh 20,000 with no interest. Whenever the business have suplus cash over the minimum balance, it can pay previous borrowings, also in multiples of sh 20,000. Required: Prepare Kupa's a. Monthly cash payment for the first six months of 2021 b. Monthly cash receipts for the first six months of 2021 c. Monthly cash budget for the first six months of 2021 ash paymots. Oct Nov Dec Jan Feb Mar Apr May June Jul
FIN 3010 CASH BUDGET ASSIGNMENT QUESTION ONE Kupa Ltd. has approached their local banker for an overdraft facility in 2021. The banker has asked to provide a cash budget for the first six months of 2021. The company has furnished you with the following information. Sales (Sh.'000') 44 4 Oct Nov Dec. Jan. Feb. Mar. Apr. May June July Aug. Aug. Sep 2020 2020 2020 2021 2021 2021 2021 2021 2021 2021 2021 2021 190 170 200 180 220 240 210 160 180 220 240 220 Sales are made 40% cash. Of credit sales, 30% is collected in the month of sale, 40% one month after sale and 25% two months from sales Gross profit margin is 25%. Goods purchased in a month are sold two months after the month of purchase. Purchases are paid 30% one the month of purchase and the remainder two months thereafter. Cash Overheads average 10% of the monthly sales. Cash Operating expenses are 15% of the monthly sales. New equipment costing Sh. 24,000 will, be purchased for cash in April. Annual depreciation on this equipment will be 25% of the cost. Tax payments for Sh 40, 000 each month are due in January and March. The beginning cash balance in 2021 is expected to be Sh 250,000. This cash balance has to be maintained. In case of deficits, borrowing in multiples of Sh 20,000 with no interest. Whenever the business have suplus cash over the minimum balance, it can pay previous borrowings, also in multiples of sh 20,000. Required: Prepare Kupa's a. Monthly cash payment for the first six months of 2021 b. Monthly cash receipts for the first six months of 2021 c. Monthly cash budget for the first six months of 2021 ash paymots. Oct Nov Dec Jan Feb Mar Apr May June Jul
Cornerstones of Financial Accounting
4th Edition
ISBN:9781337690881
Author:Jay Rich, Jeff Jones
Publisher:Jay Rich, Jeff Jones
Chapter4: Internal Control And Cash
Section: Chapter Questions
Problem 66.2C
Related questions
Question
Transcribed Image Text:FIN 3010 CASH BUDGET ASSIGNMENT
QUESTION ONE
Kupa Ltd. has approached their local banker for an overdraft facility in 2021. The
banker has asked to provide a cash budget for the first six months of 2021. The
company has furnished you with the following information.
Sales
(Sh.'000')
44 4
Oct Nov Dec. Jan. Feb. Mar. Apr.
May June July Aug.
Aug. Sep
2020 2020 2020 2021 2021 2021 2021 2021 2021 2021 2021 2021
190 170 200 180 220 240 210 160 180 220 240 220
Sales are made 40% cash. Of credit sales, 30% is collected in the month
of sale, 40% one month after sale and 25% two months from sales
Gross profit margin is 25%. Goods purchased in a month are sold two
months after the month of purchase. Purchases are paid 30% one the
month of purchase and the remainder two months thereafter.
Cash Overheads average 10% of the monthly sales.
Cash Operating expenses are 15% of the monthly sales.
New equipment costing Sh. 24,000 will, be purchased for cash in April.
Annual depreciation on this equipment will be 25% of the cost.
Tax payments for Sh 40, 000 each month are due in January and March.
The beginning cash balance in 2021 is expected to be Sh 250,000. This cash balance
has to be maintained. In case of deficits, borrowing in multiples of Sh 20,000 with no
interest. Whenever the business have suplus cash over the minimum balance, it can
pay previous borrowings, also in multiples of sh 20,000.
Required:
Prepare Kupa's
a. Monthly cash payment for the first six months of 2021
b. Monthly cash receipts for the first six months of 2021
c. Monthly cash budget for the first six months of 2021
ash paymots.
Oct Nov
Dec Jan Feb Mar
Apr May June Jul
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