Cash Budgeting
Fullysik Imports operates its business in St.Albans and asks you to prepare its budgets
for the quarter ending 31 December 2011
They provide you with the following information.
Estimated Sales Estimated Purchases
July $70,000 $26,000
August $65,000 $25,000
September $62,000 $24,000
October $58,000 $25,000
November $60,000 $23,000
December $55,000 $28,000
Sales are expected to be 30% for cash, 70% on credit.
The value owing for credit sales are expected to be collected in the following way:
50% in the month following the month of sale.
30% in the second month following the month of sale.
15% in the third month following the month of sale.
5% are uncollectable.
All purchases are made on credit, and are expected to be paid for in the following way:
40% in the month of purchase. 60% in the month following the month of purchase.
Monthly selling expenses are budgeted at 5%
$4,000 fixed plus variable of total sales.variable.
Monthly administrative expenses are budgeted at $3,000 fixed plus
variable of 10% of total sales.
Depreciation of Office equipment is included in the administration expenses shown above.
Depreciation of Office equipment is $3,600 p.a.
Finance expenses are expected to be $8,000 per month. This does include the bad debts
expense, which is recognised immediately in the month of sale.
In October they intend to buy some new equipment for $50,000
Paying a deposit in October of $5,000 and repayments of $8,000
a month starting in November.
In December they expect to receive $12,000 cash for the sale of an old vehicle.
Cash at bank at 1 October 2011 $45,000
Required:
(a) Prepare a table showing Collections from Debtors by month, for the three month period ending 31
December 2011
(b) Prepare a Cash Budget by month and for the quarter, for the three months ending 31 December 2011
Answer.
(a) Collection from Debtors.
Fullysik Imports
Schedule of Collections from Debtors for the Quarter ending 31 December 2011
Month
TOTAL
Fullysik Imports
Schedule of Payments to Creditors for the Quarter ending 31 December 2011
Month
TOTAL
(b) Cash Budget
Fullysik Imports
Cash Budget by month and for the quarter, for the 3 months ending 31 December 2011
TOTAL
Receipts
Payments
Closing Cash
balance
Fullysik Imports operates its business in St.Albans and asks you to prepare its budgets
for the quarter ending 31 December 2011
They provide you with the following information.
Estimated Sales Estimated Purchases
July $70,000 $26,000
August $65,000 $25,000
September $62,000 $24,000
October $58,000 $25,000
November $60,000 $23,000
December $55,000 $28,000
Sales are expected to be 30% for cash, 70% on credit.
The value owing for credit sales are expected to be collected in the following way:
50% in the month following the month of sale.
30% in the second month following the month of sale.
15% in the third month following the month of sale.
5% are uncollectable.
All purchases are made on credit, and are expected to be paid for in the following way:
40% in the month of purchase. 60% in the month following the month of purchase.
Monthly selling expenses are budgeted at 5%
$4,000 fixed plus variable of total sales.variable.
Monthly administrative expenses are budgeted at $3,000 fixed plus
variable of 10% of total sales.
Depreciation of Office equipment is included in the administration expenses shown above.
Depreciation of Office equipment is $3,600 p.a.
Finance expenses are expected to be $8,000 per month. This does include the bad debts
expense, which is recognised immediately in the month of sale.
In October they intend to buy some new equipment for $50,000
Paying a deposit in October of $5,000 and repayments of $8,000
a month starting in November.
In December they expect to receive $12,000 cash for the sale of an old vehicle.
Cash at bank at 1 October 2011 $45,000
Required:
(a) Prepare a table showing Collections from Debtors by month, for the three month period ending 31
December 2008
(b) Prepare a Cash Budget by month and for the quarter, for the three months ending 31 December 2008
Answer.
(a) Collection from Debtors.
Fullysik Imports
Schedule of Collections from Debtors for the Quarter ending 31 December 2011
Month Credit Sales October November December
July 49,000 7,350
August 45,500 13,650 6,825
September 43,400 21,700 13,020 6,510
October 40,600 20,300 12,180
November 42,000 21,000
December 38,500
TOTAL $259,000 $42,700 $40,145 $39,690
Fullysik Imports
Schedule of Payments to Creditors for the Quarter ending 31 December 2011
Month Credit Purchases October November December
September $24,000 $14,400
October $25,000 $10,000 $15,000
November $23,000 $9,200 $13,800
December $28,000 $11,200
TOTAL $100,000 $24,400 $24,200 $25,000
(b) Cash Budget
Fullysik Imports
Cash Budget by month and for the quarter, for the 3 months ending 31 December 2011
October November December TOTAL
Op. Bank Balance 45,000 54,330 58,675
Receipts
Cash Sales 17,400 18,000 16,500 51,900
Debtor Collections 42,700 40,145 39,690 122,535
Sale of Vehicle 12,000 12,000
Total Receipts 60,100 58,145 68,190
Payments
Creditor Payments 24,400 24,200 25,000 73,600
Selling Expenses 4,000 4,000 4,000 12,000
2,900 3,000 2,750 8,650
Admin Expenses 3,000 3,000 3,000 9,000
5,800 6,000 5,500 17,300
-300 -300 -300 -900
Finance Expenses 8,000 8,000 8,000 24,000
-2,030 -2,100 -1,925 -6,055
New Equipment 5,000 8,000 8,000 21,000
Total Payments 50,770 53,800 54,025
Closing Cash
balance $54,330 $58,675 $72,840
in the month following the month of purchase.
of total sales.variable.
cluded in the administration expenses shown above.
per month. This does include the bad debts
ately in the month of sale.
ons from Debtors by month, for the three month period ending 31
h and for the quarter, for the three months ending 31 December 2008
Fullysik Imports
from Debtors for the Quarter ending 31 December 2011
December
6,510
12,180
21,000
$39,690
Fullysik Imports
to Creditors for the Quarter ending 31 December 2011
December
$13,800
$11,200
$25,000
Fullysik Imports
for the quarter, for the 3 months ending 31 December 2011
TOTAL
45,000
186,435
158,595
$72,840
Cash, P & L, and Balance Sheet
Kim Kardashian run a Waste Disposal business called Trailer Park Trash.
The business has following assets and liabilities as at 30th November 2011
Assets Liabilities
Bank $64,800 Creditors $28,790
Debtors $32,400 Loan $230,000
Prepaid Insurance $8,900
Inventory $22,300 Capital $152,310
Vehicles $175,000
Equipment $210,000
Accumulated depreciation on the Equipment -$102,300
Other information:
Fees for December are budgeted at $156,000
Fees are cash 35% and credit 65%
Collections from Debtors are 35% in the month of service and
65% in the month following the month of service.
Prepaid Insurance should decrease by $1,200
December purchases are budgeted at $96,500 All on credit.
Creditors are paid 20% in the month of purchase and
80% in the month following the month of purchase
Estimated inventory on 31 Dec is $18,900
Cash Operating expenses in Dec are estimated to be $32,900
Some of the Equipment is sold on Dec 1 for $13,400 cash. Its original cost was
$38,900 and it had Accumulated Depreciation of $24,500
Depreciation on the equipment for the month of Dec is $2,600
Required:
Prepare the following:
(a) the cash budget for Dec 2011
(b) the budgeted profit and loss statement for Dec 2011, and
(c ) the budgeted balance sheet as at 31 Dec 2011
Trailer Park Trash
Cash Budget for the month of Dec 2011
Opening Cash balance
Receipts
Payments
Trailer Park Trash
Budgeted Profit and Loss Statement for the month of Dec 2011
$ $
Revenue
Less Cost of Goods Sold
Gross Profit
Net Profit
Trailer Park Trash
Budgeted Balance Sheet as at 31 Dec 2011
Assets - Current $ $ Liabilities $ $
Assets - Non current Owners Equity
Kevin Spears and Britney Federline run a Waste Disposal business called Trailer Park Trash.
The business has following assets and liabilities as at 30th November 2011
Assets Liabilities
Bank $64,800 Creditors $28,790
Debtors $32,400 Loan $230,000
Prepaid Insurance $8,900
Inventory $22,300 Capital $152,310
Vehicles $175,000
Equipment $210,000
Accumulated depreciation on the Equipment -$102,300
Other information:
Fees for December are budgeted at $156,000
Fees are cash 35% and credit 65%
Collections from Debtors are 35% in the month of service and
65% in the month following the month of service.
Prepaid expenses should decrease by $1,200
December purchases are budgeted at $96,500 All on credit.
Creditors are paid 20% in the month of purchase and
80% in the month following the month of purchase
Estimated inventory on 31 Dec is $18,900
Cash Operating expenses in Dec are estimated to be $32,900
Some of the Equipment is sold on Dec 1 for $13,400 cash. Its original cost was
$38,900 and it had Accumulated Depreciation of $24,500
Depreciation on the equipment for the month of Dec is $2,600
Required:
Prepare the following:
(a) the cash budget for Dec 2011
(b) the budgeted profit and loss statement for Dec 2011, and
(c ) the budgeted balance sheet as at 31 Dec 2011
Trailer Park Trash
Cash Budget for the month of Dec 2011
Beginning Cash balance 64,800
Receipts
Cash Sales 54,600
Collections from Debtors 67,890
Sale of Equipment 13,400
Total Receipts 135,890
Payments
Payments to Creditors 48,090
Cash Operating Expenses 32,900
Total Payments 80,990
Closing Bank Balance 119,700
Trailer Park Trash
Budgeted Profit and Loss Statement for the month of Dec 2011
$ $
Revenue
Fees 156,000
Less Cost of Goods Sold
Opening Inventory 22,300
Purchases 96,500
Closing Inventory 18,900 99,900
Gross Profit 56,100
Add/(Less) Profit/(Loss) on Sale of Equipment -1,000 55,100
Other Expenses
Cash Operating Expenses 32,900
Depreciation 2,600
Insurance 1,200 36,700
Net Profit $18,400
Trailer Park Trash
Budgeted Balance Sheet as at 31 Dec 2011
Assets - Current $ $ Liabilities $ $
Bank 119,700 Creditors 77,200
Debtors 65,910 Loan 230,000
Prepaid Insurance 7,700 307,200
Inventory 18,900 212,210
Assets - Non current Owners Equity
Vehicles 175,000 Capital 152,310
Equipment 171,100 Profit 18,400
Acc Depreciation -80,400 265,700 170,710
$477,910 $477,910
Performance Report
From the given information, you are required to prepare a Performance report for the month of Nov
2011. The report is to show Variance and percentage variance. Show all $ values to the
nearest $, and all % values to 2 decimal places.
I. Am is a beauty therapist The budget for the current financial year is:
Support Labour $98,000
Rent $18,000
Electricity $4,200
Hair Products $15,000
Cleaning $6,000
Depreciation $4,800
Telephone $7,800
Advertising $12,360
The total budget is apportioned equally each month.
It is anticipated that: $550,000 will be earned from fees for the year.
$78,000 will be paid for professional labour for the year.
Actual results were: November-11
Fees Income $43,680
Professional labour $5,980
Support Labour $8,125
Rent $1,500
Electricity $320
Hair Products $975
Cleaning $540
Depreciation $400
Telephone $730
Advertising $1,780
Performance Report for the month of Nov 2011
Budget Actual Variance U/F % Variance
$ $ $ %
Fees Income
Professional labour
Support Labour
Rent
Electricity
Hair Products
Cleaning
Depreciation
Telephone
Advertising
Profit
From the given information, you are required to prepare a Performance report for the month of Nov
2011. The report is to show Variance and percentage variance. Show all $ values to the nearest
$, and all % values to 2 decimal places.
C.Ling is an beauty therapist The budget for the current financial year is:
Support Labour $98,000
Rent $18,000
Electricity $4,200
Hair Products $15,000
Cleaning $6,000
Depreciation $4,800
Telephone $7,800
Advertising $12,360
The total budget is apportioned equally each month.
It is anticipated that: $550,000 will be earned from fees for the year.
$78,000 will be paid for professional labour for the year.
Actual results were: November-11
Fees Income $43,680
Professional labour $5,980
Support Labour $8,125
Rent $1,500
Electricity $320
Hair Products $975
Cleaning $540
Depreciation $400
Telephone $730
Advertising $1,780
Performance Report for the month of Nov 2011
Budget Actual Variance U/F % Variance
$ $ $ %
Fees Income 45,833 43,680 2,153 4.70%
Professional labour 6,500 5,980 520 8.00%
Support Labour 8,167 8,125 42 0.51%
Rent 1,500 1,500 0 0.00%
Electricity 350 320 30 8.57%
Hair Products 1,250 975 275 22.00%
Cleaning 500 540 -40 -8.00%
Depreciation 400 400 0 0.00%
Telephone 650 730 -80 -12.31%
Advertising 1,030 1,780 -750 -72.82%
Profit 25,487 23,330 2,157 8.46%