QUESTION 2

Prepare a cash budget for the third quarter period ending on 30th September 2017.

JULY AUGUST SEPTEMBER

FORECASTED SALES 100 000 125 000 105 000
ADD CASH RECEIPTS:

CASH SALES (40%) 36 000 40 000 50 000

ACCOUNT RECEIVABLE (5%) 4 250 4 500 5 000
UNCOLLECTED INCOME (5%) 5 000 6 250 5 250
QUATERLY DIVIDENT - - 4 000

TOTAL CASH RECEIPTS 45 250 50 750 64 250

TOTAL CASH AVAILABLE 145 250 175 750 169 250
LESS: CASH PAYMENTS

CASH PURCHASE (35%) 35 000 43 750 36 750

ACCOUNT PAYABLE (7%) 7 000 - -
RENT EXPENSES 3 000 3 000 3 000
WAGES 20 000 20 000 20 000
INSURANCE 2 000 2 000 2 000
DEPRECIATION 13 000 13 000 13 000

TOTAL CASH PAYMENTS 54 000 53 750 48 750

CLOSING CASH BALANCE 91 250 122 000 120 500