City rentals Itd offer apartments to rent for private tenants in city centres across the UK; below is a schedule of the expected rental income due for the first 6 months of 2021 www Month Rent due January February March £65,000 April £59,000 May £61,000 June £62,000 £65,000 £63,000 The collection of the rental income varies significantly so City rentals Itd has established the following average trends which the company uses as the basis for its cash budgeting: • 10% of tenants take advantage of a 2% discount offered for payment in advance and pay in the month before the rent is due. 70% pay in the month the rent is due. 12% pay one month after the rent is due. A further 5% pay two months after the rent is due. The balance is unable to be collected by City rentals Itd.
City rentals Itd offer apartments to rent for private tenants in city centres across the UK; below is a schedule of the expected rental income due for the first 6 months of 2021 www Month Rent due January February March £65,000 April £59,000 May £61,000 June £62,000 £65,000 £63,000 The collection of the rental income varies significantly so City rentals Itd has established the following average trends which the company uses as the basis for its cash budgeting: • 10% of tenants take advantage of a 2% discount offered for payment in advance and pay in the month before the rent is due. 70% pay in the month the rent is due. 12% pay one month after the rent is due. A further 5% pay two months after the rent is due. The balance is unable to be collected by City rentals Itd.
Chapter16: Real Estate And High-risk Investments
Section: Chapter Questions
Problem 1DTM
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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
City rentals ltd offer apartments to rent for private tenants in city centres across the UK; below is a schedule of the expected rental income due for the first 6 months of 2021
Month January February March April May June
Rent due £62,000 £65,000 £65,000 £59,000 £61,000 £63,000
The collection of the rental income varies significantly so City rentals ltd has established the following average trends which the company uses as the basis for its cash budgeting:
• 10% of tenants take advantage of a 2% discount offered for payment in advance and pay in the month before the rent is due.
• 70% pay in the month the rent is due.
• 12% pay one month after the rent is due.
• A further 5% pay two months after the rent is due.
• The balance is unable to be collected by City rentals ltd.
What will be the budgeted cash receipts for April from rental income?
Transcribed Image Text:nA1
City rentals Itd offer apartments to rent for private tenants in city centres across
the UK; below is a schedule of the expected rental income due for the first 6
months of 2021
Month
Rent due
January
£62,000
February March
£65,000
April
£65,000 £59,000
May
£61,000 £63,000
June
The collection of the rental income varies significantly so City rentals Itd has
established the following average trends which the company uses as the basis for
its cash budgeting:
• 10% of tenants take advantage of a 2% discount offered for payment in advance
and pay in the month before the rent is due.
70% pay in the month the rent is due.
12% pay one month after the rent is due.
A further 5% pay two months after the rent is due.
The balance is unable to be collected by City rentals Itd.
What will be the budgeted cash receipts for April from rental income?
en A2
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