FFM Foundations in Financial Management

Quiz 5.0
       
 
Name: Date: Group:

This ONE question is compulsory and MUST be attempted

1 Print Co is a printing company providing a range of printing services to commercial businesses and the
public (noncommercial customers.) It has three main suppliers, which it uses for the majority of its supplies,
but also uses a number of smaller suppliers for its sundry purchases. Whilst commercial customers are
sometimes provided with a credit facility, non-commercial customers must pay on the day with cash,
cheque, debit or credit card. Print Co prepares cleared funds forecasts on a weekly basis.
You are an accounting technician for the company and have been asked to prepare a cleared funds forecast
for the period Monday 19 January to Friday 23 January 2009 inclusive. You have been provided with the
following information:
1 Receipts
Commercial customers
Customer Credit terms Payment 19 Jan. 19 Dec. 19 Nov.
name method 2009 sales 2008 sales 2008 sales
Anchor Co 2 calendar months Cheque $18,000 $24,000 $16,000
Beauty Co 1 calendar months Cheque $13,000 $18,000 $17,000
Kent Co 1 calendar months BACS $20,000 $18,000 $15,000
Hut Co None Cash $2,200 $5,400 -
Light Co None Cheque $4,500 - $2,200

Non-commerical customers
Payment Mon Tue Wed Thu Fri Mon Tue Wed Thu Fri
method 12 13 14 15 16 19 20 21 22 23
Jan. Jan. Jan. Jan. Jan. Jan. Jan. Jan. Jan. Jan.
Cash $300 $230 - $120 - - $220 $350 - $430
Cheque $220 - - - - - - - - -
Debit card $255 $426 - - - $170 $210 - - -
Credit card - - - - - - - - - $3,500

Notes
(i) Receipt of money by BACS is instantaneous.
(ii) All commercial customers are reliable, as cheques are always received on 19th day of each
month. They are banked on the same day and clear on the fourth working day following the date
of receipt.
(iii) Debit card payments are credited to Print Co’s account on the next working day following the date
of sale. They represent cleared funds as soon as they are credited.
(iv) Credit card receipts clear in Print Co’s bank account on the fifth working day following the day of
sale.
(v) A ‘working day’ is a Monday, Tuesday, Wednesday, Thursday or Friday

2 Payments to suppliers
Main suppliers
Supplier Credit terms Payment Jan. 2009 Dec. 2008 Nov. 2008
name method purchases purchases purchases
Ink Co 1 calendar months Direct debit $6,500 $5,500 $4,200
Toner Co 2 calendar months Direct debit $8,500 $8,000 $10,600
Paper Co 1 calendar months Direct debit $7,200 $10,500 $5,400

 
FFM Foundations in Financial Management
Quiz 5.0
       
 
Notes
(i) Print Co’s monthly direct debit payments will leave its account on 23 January.
(ii) Print Co pays its sundry suppliers by cheque each month. These total $8,200 for January and will
also be sent out on 23 January.
3 Payments to suppliers
All staff are paid a monthly salary by BACS on the 22nd day of each month. The total salaries cost
for January is $9,600. BACS transactions are initiated and paid on the same day.

4 Other payments
Every Monday morning, the cashier withdraws $150 from the company bank account to use as petty
cash. The money leaves Print Co’s bank account straight away.

5 Other information
The balance on Print Co’s bank account will be $35,000 on 19 January 2009. This represents both
the book balance and cleared funds.

Required:

Prepare a cleared funds forecast for the period Monday 19 January to Friday 23 January 2009 inclusive
using the information provided. Show clearly the uncleared funds float and the total book balance carried
forward each day.

 
FFM Foundations in Financial Management
Quiz 5.1
       

PEARLY‐ C CO is a manufacturing company producing and selling a range of cleaning products to wholesale customers. It 
has three suppliers and two customers. Pearly Co relies on its cleared funds forecast to manage its cash. You are an 
accounting technician for the company and have been asked to prepare a cleared funds forecast for the period Monday 
2 January to Friday 6 January 20X6 inclusive. You have been provided with the following information: 

Receipt from Customers

Customer name Credit Payment 2 Jan 20x6 2 Dec 20x5

Terms Method Sales ($) Sales ($)
X Co. 1 month calendar BACS 140,000 220,000
Y Co. none Cheque 260,000 270,000
Z Co. none Cheque 200,000 320,000  

(a) Receipt of money by BACS is instantaneous. 

(b) Y, Z  Co's cheque will be paid into Pearly Co's bank account on the same day as the sale is made and will clear on the 
third day following this (excluding day of payment). 

Payment to Suppliers

Customer name Credit Payment 2 Jan 20x6 2 Dec 20x5 2 Nov 20x5
Terms Method Purchases ($) Purchases ($) Purchases ($)
A Co. 1 month calendar Standing order 90,000 80,000 70,000
B Co. 2 month calendar Cheque 125,000 120,000 115,000
C Co. none Cheque 142,000 135,000 128,000  

(a) Pearly Co has set up a standing order for $70,000 a month to pay for supplies from A Co. This will leave Pearly's bank 
account on 2 January. Every few months, an adjustment is made to reflect the actual cost of supplies purchased (you do 
NOT need to make this adjustment). 

(b) Pearly Co will send out, by post, cheques to B Co and C Co on 2 January. The amounts will leave its bank account on 
the second day following this (excluding the day of posting). 

Wages & Salaries

Dec 20x5 Jan 20x6
Weekly wage 20,000 24,000
Monthly salaries 100,000 120,000  

(a) Factory workers are paid cash wages (weekly). They will be paid one week's wages, on 6 January, for the last week's 
work done in December (ie they work a week in hand). 

(b) All the office workers are paid salaries (monthly) by BACS. Salaries for December will be paid on 2 January. 

Other miscellaneous payments 

(a) Every Monday morning, the petty cashier withdraws $600 from the company bank account for the petty cash tin. The 
money leaves Pearly's bank account straight away. 
(b) The window cleaner is paid $35 from petty cash every Wednesday morning. 

(c) Office stationery will be ordered by telephone on Tuesday 3 January to the value of $2,400. This is paid for by 
company debit card. Such payments are generally seen to leave the company account on the next working day. 

(d) Five new computers will be ordered over the internet on 5 January at a total cost of $6,000. A cheque will be sent out 
on the same day. The amount will leave Pearly Co's bank account on the second day following this (excluding the day of 
posting). 

Other information 

The balance on Pearly's bank account will be $100,000 on 2 January 20X6. This represents both the book balance and 
the cleared funds. 

Required 

Prepare a cleared funds forecast for the period Monday 2 January to Friday 6 January 20X6 inclusive using the 
information provided. Show clearly the uncleared funds float each day.  

 
 
 
 
 
 
 
 
 
 
 
FFM Foundations in Financial Management

 Quiz 5.2      
 
This ONE question is compulsory and MUST be attempted
Potto Co produces and sells a range of pottery to two major stores and through their own factory shop.
The following information has been collected:

1. Sales
Major Stores
Customer Credit terms Payment Sales to Sales to Sales to
name method 9 November 9 December 9 January
2011 2011 2012
Wattle Co 2 calendar months BACS $25,000 $15,000 $10,000
Fired Co 1 calendar month Cheque $10,000 $12,000 $9,000

Factory Shop
Payment Saturday Monday Tuesday Wednesday Thursday Friday
method 7 January 9 January 10 January 11 January 12 January 13 January
2012 2012 2012 2012 2012 2012
Cash $600 $150 $450 $350
Cheque $100 $300
Debit card $500

Notes
(a) Receipt of money by BACS is instantaneous.
(b) Cheques from the major stores are always received on the 9th day of each month. All cheques are
banked the day they are received and clear on the third working day following receipt.
(c) Debit card receipts are credited to Potto Co’s bank account on the fourth working day following sale.
(d) Potto Co is open Monday to Saturday inclusive. Cash is banked on the same day it is taken, except
on Saturdays when the bank is closed. Cash received on a Saturday is banked on the following
Monday.

2. Payments to suppliers
Supplier Credit terms Payment November December January
name method 2011 2011 2012
purchases purchases purchases
Clay Co 2 calendar months Cheque $25,000 $22,000 $23,000
Glaze Co 1 calendar month Direct debit $4,000 $5,000 $3,000

Notes

(a) Potto Co’s direct debit payments leave its account on the 10th of the month.
(b) All cheques are sent out on the 10th of the month and the amounts leave its bank account on the
second working day after this.
(c) Cheques will be paid to sundry suppliers in January amounting to $15,000.

3. Wages and salaries

(a) The office workers are paid their monthly salaries on the 2nd of every month by BACS. These
amount to $40,000.
(b) Factory workers are paid cash weekly every Friday. These amount to $6,000

4. Other miscellaneous payments

(a) $150 of petty cash is drawn from the bank account every Monday. The money leaves the bank
account straight away.
(b) The cleaner is paid $50 every week out of petty cash every Tuesday.

5. Other information
The balance on Potto’s bank account will be $12,000 on 9 January 2012 and this represents both the
cash book balance and the cleared funds.
Required:
Prepare a cleared funds forecast (i.e. a forecast of the actual cash available to Potto Co) for the period
Monday 9 January to Friday 13 January 2012 inclusive. Show clearly the uncleared funds float each
day.  
Note: a working day for the bank is Monday, Tuesday, Wednesday, Thursday or Friday
 FFM Foundations in Financial Management
Quizz 5.3
       
 
Name: Date: Group:

This ONE question is compulsory and MUST be attempted

1 A business has $1,200 in cleared funds in its bank account at the beginning of the week (Monday). It
makes all payments by cheque, and it is assumed that payments are cleared on the third day from the
day of payment, so that if a cheque payment by cheque is sent on Monday, for example, the payment will
clear through the bank account on Wednesday. Receipts of payments by cheque are cleared by the bank
on the fourth day from the day of receipt of payment. Cash payments and receipts have same-day
clearing.
The business made a tax payment of $15,900 on Monday, and will make payments to suppliers of
$12,300 on Tuesday. In addition, $500 will be withdrawn for petty cash on Tuesday. In the previous week,
there were receipts of payments by cheque of $8,400 on Wednesday, but no cheque receipts on
Thursday and Friday. In the current week, it is estimated that receipts will be $2,000 per day in cash, plus
the following receipts by cheque:
$
Monday 6,000
Tuesday 6,000
Wednesday 6,000
Thursday 9,000
Friday 1,000

Required

(i) Prepare a cleared funds cash flow forecast for the week Monday to Friday. (50 marks)
(ii) Calculate the amount of float at the end of each day of the week. (50 marks)
 
FFM Foundations in Financial Management
Quizz 5.4
       
 

Weed Care Ltd

Weed Care Ltd is a manufacturing company producing and selling a range of weedkillers to wholesale
customers. It has three suppliers and two customers.
Weed Care Ltd relies on its cleared funds forecast to manage its cash. The available information are
detailed in Table 1 , 2 and 3:

            

 
FFM Foundations in Financial Management
Quizz 5.4
       
 

                  
 
Other miscellaneous payments

Every Monday morning, the petty cashier withdraws £500 from the company bank account for the petty cash
tin. The money leaves Weed Care's bank account straight away.
New office furniture will be ordered by telephone on 7 November at a total cost of £1,250. The company's
debit card will be used and the amount will therefore leave Weed Care Ltd's bank account on the next day.

Other information

The balance on Weed Care's bank account will be £350,000 on 7 November 2005. This represents both the book
balance and cleared funds.

Requirement

You have been asked to prepare a cleared funds forecast for the period Monday 7 to November to Friday 11
November 2005 inclusive using the information provided. Show clearly the uncleared funds float each day.