Cash Budget For 3 Months Ending 31st August 2015

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Question 1 Zahlee Ltd Cash budget for 3 months ending 31st August 2015 Appendix 1 June July August Receipts: Sales Cash 60’000 40’000 75’000 Credit (50%) 50’000 60’000 40’000 Sub-letting old warehouse 2’500 2’500 2’500 Loan received - - 30’000 Total receipts (a) 112’500 102’500 137’500 Payments: Purchases (suppliers) 60’000 50’000 50’000 Purchase of new transport vehicles 45’000 - 55’000 Wages 16’000 16’000 18’000 Overheads 19’000 23’000 21’000 Interest of bank loan 100 100 100 New loan payment - - 200 Total payments (b) 140’100 89’100 144’300 Surplus/Deficit for the month (a-b) (27’600) 13’400 (6800) Opening balance 22’000 (5600) 7800 Closing balance (5’600) 7800 1000 B) By looking at the cash profile for Zahlee Ltd, it shows that their cash budget looks respectable, and have managed to keep their closing balance out of the minus figures. There are many reasons to why this is, they are; Bank loan of £30’000 From analysing the cash budget it demonstrates that by Zahlee Ltd taken out the second loan of £30’000, this was one of the factor that helped the business to stay out of minus figures in the closing balance of the cash budget. By putting this cash injection into their business it enabled them to average out the inflow and outflow of money within the business. Bank overdraft With the bank overdraft even though it is not shown in the cash budget this will have an important impact on the business as Zahlee Ltd will have more money to spend

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