CASH BUDGET JL is preparing its cash budget for the next three quarters of the 2019 financial year. The following data have been extracted from the operating budgets: Quarter 1 Quarter 2 Quarter 3 Sales revenue 500 000 450 000 480 000 Direct material purchases 138 000 151 200 115 600 Additional information: a) JL sells 20% of its goods for cash. It is estimated that 70% of all credit sales is received within the quarter in which the sales are made; and 30% of all credit sales is received in the following quarter. It is estimated that trade receivables will be R125 000 at the start of Quarter 1. No credit loss is anticipated. b) All direct material purchases are made on credit. It is estimated that 50% of all direct material purchases are paid in the quarter of purchase; the remaining 50% is paid in the quarter following the quarter of purchase. It is estimated that the amount owning for direct material purchases will be R60 000 at the beginning of Quarter 1. c) JL pays its labour and overhead costs as and when they are incurred. It has been estimated that labour and overhead costs in total will be R303 600 per quarter. This figure includes depreciation of R19 600. d) JL expects to repay a loan of R100 000 in Quarter 3. e) The company is expected to have a credit balance of R49 400 at the start of Quarter 1. Required: Prepare a cash budget for each of the first two quarters of 2019 (Note: answers should be in columnar format; show ALL calculations).
CASH BUDGET JL is preparing its cash budget for the next three quarters of the 2019 financial year. The following data have been extracted from the operating budgets: Quarter 1 Quarter 2 Quarter 3 Sales revenue 500 000 450 000 480 000 Direct material purchases 138 000 151 200 115 600 Additional information: a) JL sells 20% of its goods for cash. It is estimated that 70% of all credit sales is received within the quarter in which the sales are made; and 30% of all credit sales is received in the following quarter. It is estimated that trade receivables will be R125 000 at the start of Quarter 1. No credit loss is anticipated. b) All direct material purchases are made on credit. It is estimated that 50% of all direct material purchases are paid in the quarter of purchase; the remaining 50% is paid in the quarter following the quarter of purchase. It is estimated that the amount owning for direct material purchases will be R60 000 at the beginning of Quarter 1. c) JL pays its labour and overhead costs as and when they are incurred. It has been estimated that labour and overhead costs in total will be R303 600 per quarter. This figure includes depreciation of R19 600. d) JL expects to repay a loan of R100 000 in Quarter 3. e) The company is expected to have a credit balance of R49 400 at the start of Quarter 1. Required: Prepare a cash budget for each of the first two quarters of 2019 (Note: answers should be in columnar format; show ALL calculations).
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:CASH BUDGET
JL is preparing its cash budget for the next three quarters of the 2019 financial year. The following data have been
extracted from the operating budgets:
Quarter 1
Quarter 2
Quarter 3
R
Sales revenue
500 000
450 000
480 000
Direct material purchases
138 000
151 200
115 600
Additional information:
a) JL sells 20% of its goods for cash. It is estimated that 70% of all credit sales is received within the quarter in which
the sales are made; and 30% of all credit sales is received in the following quarter. It is estimated that trade
receivables will be R125 000 at the start of Quarter 1. No credit loss is anticipated.
b) All direct material purchases are made on credit. It is estimated that 50% of all direct material purchases are paid in
the quarter of purchase; the remaining 50% is paid in the quarter following the quarter of purchase. It is estimated
that the amount owning for direct material purchases will be R60 000 at the beginning of Quarter 1.
c) JL pays its labour and overhead costs as and when they are incurred. It has been estimated that labour and overhead
costs in total will be R303 600 per quarter. This figure includes depreciation of R19 600.
d) JL expects to repay a loan of R100 000 in Quarter 3.
e) The company is expected to have a credit balance of R49 400 at the start of Quarter 1
Required:
Prepare a cash budget for each of the first two quarters of 2019 (Note: answers should be in columnar format, show ALL
calculations).
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