A. Prepare the cash budget of Meridian Machine Tools LLC for March to May 2020 from the following information. The company estimates its sales, purchases and other eexpenses as following February March January April May Particulars OMR OMR OMR OMR OMR 120,000 180,000 90,000 135,000 270,000 405,000 180,000 270,000 Sales 80,000 Purchases 60,000 Wages 18,000 23,000 32,000 45,000 50,000 Admin –Expenses 10,000 20,000 25,000 30,000 35,000 Selling & Distribution Expenses 24,000 36,000 48,000 42,000 12,000 The company also provides additional information to its estimates: 1. Cash sale are 20% of total sales; 50% of sales amount is collected in one month and the balance in two months 2. 25% of purchases are made on cash basis; 50% of purchases amount is paid within one month and the balance in two months 3. The time lag in the payments of wages is half (1/2) of the month and that of Admin. Expenses one month; Admin Expenses for each month include deprecation amounting to RO 5,000. 4. 10,000 6% debentures of RO 10 each were issued in January 2019. The interest is due in June and December every year 5. Selling and distribution expenses are paid in the same month 6. Cash balance at the end of February RO.150,000 You are required to estimate cash receipts and cash payments prepare cash budget March to May 2020.
A. Prepare the cash budget of Meridian Machine Tools LLC for March to May 2020 from the following information. The company estimates its sales, purchases and other eexpenses as following February March January April May Particulars OMR OMR OMR OMR OMR 120,000 180,000 90,000 135,000 270,000 405,000 180,000 270,000 Sales 80,000 Purchases 60,000 Wages 18,000 23,000 32,000 45,000 50,000 Admin –Expenses 10,000 20,000 25,000 30,000 35,000 Selling & Distribution Expenses 24,000 36,000 48,000 42,000 12,000 The company also provides additional information to its estimates: 1. Cash sale are 20% of total sales; 50% of sales amount is collected in one month and the balance in two months 2. 25% of purchases are made on cash basis; 50% of purchases amount is paid within one month and the balance in two months 3. The time lag in the payments of wages is half (1/2) of the month and that of Admin. Expenses one month; Admin Expenses for each month include deprecation amounting to RO 5,000. 4. 10,000 6% debentures of RO 10 each were issued in January 2019. The interest is due in June and December every year 5. Selling and distribution expenses are paid in the same month 6. Cash balance at the end of February RO.150,000 You are required to estimate cash receipts and cash payments prepare cash budget March to May 2020.
Chapter4: Financial Planning And Forecasting
Section: Chapter Questions
Problem 4P
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Concept explainers
Master Budget
A master budget can be defined as an estimation of the revenue earned or expenses incurred over a specified period of time in the future and it is generally prepared on a periodic basis which can be either monthly, quarterly, half-yearly, or annually. It helps a business, an organization, or even an individual to manage the money effectively. A budget also helps in monitoring the performance of the people in the organization and helps in better decision-making.
Sales Budget and Selling
A budget is a financial plan designed by an undertaking for a definite period in future which acts as a major contributor towards enhancing the financial success of the business undertaking. The budget generally takes into account both current and future income and expenses.
Question
Transcribed Image Text:A. Prepare the cash budget of Meridian Machine Tools LLC for March to May 2020 from the following
information.
The company estimates its sales, purchases and other eexpenses as following
January February
March
April
Мay
Particulars
OMR
OMR
OMR
OMR
OMR
120,000 180,000
270,000 405,000
180,000 270,000
Sales
80,000
Purchases
60,000
90,000 135,000
Wages
Admin -Expenses
Selling & Distribution
Expenses
18,000
23,000
32,000
45,000
50,000
10,000
20,000
25,000
30,000
35,000
12,000
24,000
36,000
48,000
42,000
The company also provides additional information to its estimates:
1. Cash sale are 20% of total sales; 50% of sales amount is collected in one month and the balance in
two months
2. 25% of purchases are made on cash basis; 50% of purchases amount is paid within one month and
the balance in two months
3. The time lag in the payments of wages is half (1/2) of the month and that of Admin. Expenses one
month; Admin Expenses for each month include deprecation amounting to RO 5,000.
4. 10,000 6% debentures of RO 10 each were issued in January 2019. The interest is due in June and
December every year
5. Selling and distribution expenses are paid in the same month
6. Cash balance at the end of February RO.150,000
You are required to estimate cash receipts and cash payments prepare cash budget March to May 2020.
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