1.calculate the cash budget for months March and April.2.calculate the collection for debtors for March. 23:58 -4G ll i 55%QUESTION 1.docx O 2 <1.The following budgetestimates are availa ble for Ashton Ltd, manufacturerof a sing leprod uct:Actualand projected sales:CashCreditRRJanuary (actual)70 800283 200February (actual)72 000288 000March (actual)71 400285 600April (budget)68 400273 600May (budget)70 800283 200June (budget)72 000288 000De btors on average settle theiraccounts as follows:50% pay during the month following the monthof sale, and are allowed a discount of5%,47% pay during the second month following the month of sale, and3% prove uncolectable.Required production is as follows:MonthUnitsMarch17900Аpril17 400Мay17850The inventory policy of the company is to maintainclosing stock of raw materialat 80% of thefollowing month's production require ments. The company uses 5 kg of raw material at a cost of RI,50per kg, to manufacture one unit. Raw meterial stock at March01, equals 72 000 kg. Sixty percent of allraw material purcha se s are paid within the month of purcha se, and the other forty percentare paidduring the month folowing the month of purcha se. Total material purcha ses for February amounted toR122 440.Wages are R4 per unit, and factory overhead R3 per unit. Factory overhead include a monthlydepreciation charge of R8 000. Fixed selling and administrative expenses amount to R45 000 permonth, including a depreciation charge of R3 000. Monthly variable selling and administrativeexpenses equal 5% of total sales for the month Wages, factory overhead, and selling andadministrative expenses are all paid during the month inc urred.Computers with a book value of R12 000 will be sold for cashduring March atcomputers will be acquired at a cost of R100 000 and would be paid for in fiveinstalments commencing in MarchThe bank balance at March01 amounted to R18 750.

Cash Budget - It is a statement showing an estimation of cash flow over a specific period of time.

1. prod uct: The following budgetestimates are available for Ashton Ltd, manufacturerof a sing le Actualand projected sale s: Cash Credit Ja nuary (actual) 70 800 283 200 February (actual) 72 000 288 000 March(actunl) 71 400 285 600 April (budget) 68 400 273 600 May (budget) 70 800 283 200 June (budget) 72 000 288 000 De btors on average settle their accounts as follows: 50% pay during the month following the monthof sale, and are allowed a discount of 5%, 47% pay during the second month following the month of sak, and 3% prove uncollecta ble. Req uired prod uction is as followe: Month Units March 17900 April 17 400 May 178 50 The inventory policy of the company is to maintainclosing stock of aw materialat B0% of the following month's production require ments. The company uses 5 kg of raw material at a cost of R1,50 per kg, to manufacture one unit. Raw material stock at March01, equals 72 000 kg. Sixty percent of all raw material purcha ses are paid within the month of purcha se, a nd the other forty percent are paid during the month folowing the month of purcha se. Total mate rial purc ha ses for February a mounted to R122 440. Wages are R4 per unit, and factory overhead R3 per unit. Factory oerhead include a monthly depreciation charge of R8 000. Fixed selling and administrative expenses amount to R45 000 per month, including a depreciation charge of R3 000. Monthly variable selling and administrative expenses eq ual 5% of total sales for the month. Wages, factory overhead, and selling and administrative expe nses are all paid during the month incurred. Computers with a book value of R12 000 will be sokl for cashduring March, at computers will be acq uired at a cost of RI 00 000 and would be paid for in five instalments commencing in March The bank balance at March 01 amounted to R18 750.

Financial & Managerial Accounting

14th Edition

ISBN:9781337119207

Author:Carl Warren, James M. Reeve, Jonathan Duchac

Publisher:Carl Warren, James M. Reeve, Jonathan Duchac

Chapter21: Budgeting

Section: Chapter Questions

Problem 9DQ: A. Discuss the purpose of the cash budget. B. If the cash for the first quarter of the fiscal year...

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