Prepare Cash Budget for four quarters of 2021 Information:1. Cash at bank on 1 January 2021 amounted to R155 000.2. Projected sales per quarter for 2021:First quarter R450 000Second quarter R750 000Third quarter R870 000Fourth quarter R880 000Sixty percent (60%) of the sales are for cash and forty percent (40%) are on credit. Cash customers areentitled to a 5% cash discount.3. Collection of credit sales:55% of the credit sales are collected in the quarter of the sale.• 35% is collected in the following quarter and the balance is written off as a bad debt.4. Purchases for each quarter are expected to be as follows:First quarter R120 000Second quarter R125 000Third quarter R130 000Fourth quarter R170 000All purchases are on credit. 70% of the purchases will be paid for in the quarter of purchase and theremaining 30% in the following quarter.5. Fixed overheads total R180 000 per year and are paid for equally each quarter.6. Administrative expenses are paid for in the quarter in which they are incurred and are estimated at atotal of R15 000 per quarter.7. An investment of R100 000 matures on 30 June 2021, and interest of R12 000 will also be receivedon this date.

Particulars 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter Total Projected Sales 450,000…

Answered: Information: 1. Cash at bank on 1…

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter8: Budgeting For Planning And Control

Section: Chapter Questions

Problem 23E: Historically, Ragman Company has had no significant bad debt experience with its customers. Cash...

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Prepare Cash Budget for four quarters of 2021

Information:
1. Cash at bank on 1 January 2021 amounted to R155 000.
2. Projected sales per quarter for 2021:
First quarter R450 000
Second quarter R750 000
Third quarter R870 000
Fourth quarter R880 000
Sixty percent (60%) of the sales are for cash and forty percent (40%) are on credit. Cash customers are
entitled to a 5% cash discount.
3. Collection of credit sales:
55% of the credit sales are collected in the quarter of the sale.
• 35% is collected in the following quarter and the balance is written off as a bad debt.
4. Purchases for each quarter are expected to be as follows:
First quarter R120 000
Second quarter R125 000
Third quarter R130 000
Fourth quarter R170 000
All purchases are on credit. 70% of the purchases will be paid for in the quarter of purchase and the
remaining 30% in the following quarter.
5. Fixed overheads total R180 000 per year and are paid for equally each quarter.
6. Administrative expenses are paid for in the quarter in which they are incurred and are estimated at a
total of R15 000 per quarter.
7. An investment of R100 000 matures on 30 June 2021, and interest of R12 000 will also be received
on this date.

Definition Definition Estimate of an organization's cash flow for a future period. A cash budget forecasts future cash receipts and payments from various sources for a fiscal year. A cash budget can be created once a month or once a week to determine the organization's cash position and ensure its performance in relation to the budget. It aids in determining whether the company has enough cash and cash equivalents to meet its operational needs in the future.

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