State the reasons for the significant deterioration of the cash balance in the cash budget Photo given the operating profits recorded in the budgeted income statement 19:01 7Done be9c5e466e5e0b46ec5b7f561fd..Document 3- Cash budget4 din 13 ng Ltd's Finance Department has prepared the following cash budget and budgeted incomestatement ror tne first 3 months of the 2021/22 budget year, a period in which the company is expected toreturn to profit.Cash budgetJanuaryFebruaryMarch££Opening balance10,056(13,860)(58,499)RECEIPTS:Cash sales544,855554,580569,415Credit sales1,260,0001,273,1451,297,722Total receipts1,804,8551,827,7251,867,137PAYMENTS:Materials cash purchases(571,699)(598,922)(626,529)Materials credit purchases(235,668)(229,000)(223,457)Operating expenses(288,368)(299,903)(310,339)Fixed overheads(243,700)(243,700)(243,700)Production labour(313,955)(321,952)(330,808)Administration costs|(175,380)(178,888)(176,991)Total payments:(1,828,770)(1,872,365)(1,911,824)Net cash flow(23,916)(44,640)(44,687)Balance c/f(13,860)(58,499)(103,187)Budgeted income statementJanuaryFebruaryMarch£Sales1,818,0001,852,3021,903,755Cost of sales(1,060,500)(1,080,509)|(1,110,524)Gross profit757,500771,792793,231Operating expenses(299,903)(310,339)(319,533)Fixed overheads(285,873)(285,873)(285,873)(175,380)(761,156)(178,888)(775,100)Administration costs(176,991)Total expenses(782,398)Operating profit/(loss)(3,656)(3,307)10,833The following information is relevant to the cash budget:1.Credit customers are allowed one month's credit on sales;2. Credit suppliers allow one month credit on raw materials purchases;3. Materials and production labour costs are included in the cost of sales in the budgeted income statement.Assignment Brief TemplatePage 4 of 13This document is for Coventry University students for their own use in completing their assessed work for this module and should not bepassed to third parties or posted on any website. Any infringements of this rule should be reported to acreg.fbl@coventry.ac.ukThe following information from the budgeted Statement of Financial Position is also available.JanuaryFebruaryMarch£££Trade receivables1,273,1451,297,7221,334,340Trade payables229,000223,457216,888Finigoods inventory221,845239,345255,742Raw materials inventory385,126431,448478,752

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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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State the reasons for the significant deterioration of the cash balance in the cash budget Photo given the operating profits recorded in the budgeted income statement

19:01 7
Done be9c5e466e5e0b46ec5b7f561fd..
Document 3- Cash budget
4 din 13 ng Ltd's Finance Department has prepared the following cash budget and budgeted income
statement ror tne first 3 months of the 2021/22 budget year, a period in which the company is expected to
return to profit.
Cash budget
January
February
March
£
£
Opening balance
10,056
(13,860)
(58,499)
RECEIPTS:
Cash sales
544,855
554,580
569,415
Credit sales
1,260,000
1,273,145
1,297,722
Total receipts
1,804,855
1,827,725
1,867,137
PAYMENTS:
Materials cash purchases
(571,699)
(598,922)
(626,529)
Materials credit purchases
(235,668)
(229,000)
(223,457)
Operating expenses
(288,368)
(299,903)
(310,339)
Fixed overheads
(243,700)
(243,700)
(243,700)
Production labour
(313,955)
(321,952)
(330,808)
Administration costs
|(175,380)
(178,888)
(176,991)
Total payments:
(1,828,770)
(1,872,365)
(1,911,824)
Net cash flow
(23,916)
(44,640)
(44,687)
Balance c/f
(13,860)
(58,499)
(103,187)
Budgeted income statement
January
February
March
£
Sales
1,818,000
1,852,302
1,903,755
Cost of sales
(1,060,500)
(1,080,509)
|(1,110,524)
Gross profit
757,500
771,792
793,231
Operating expenses
(299,903)
(310,339)
(319,533)
Fixed overheads
(285,873)
(285,873)
(285,873)
(175,380)
(761,156)
(178,888)
(775,100)
Administration costs
(176,991)
Total expenses
(782,398)
Operating profit/(loss)
(3,656)
(3,307)
10,833
The following information is relevant to the cash budget:
1.
Credit customers are allowed one month's credit on sales;
2. Credit suppliers allow one month credit on raw materials purchases;
3. Materials and production labour costs are included in the cost of sales in the budgeted income statement.
Assignment Brief Template
Page 4 of 13
This document is for Coventry University students for their own use in completing their assessed work for this module and should not be
passed to third parties or posted on any website. Any infringements of this rule should be reported to acreg.fbl@coventry.ac.uk
The following information from the budgeted Statement of Financial Position is also available.
January
February
March
£
£
£
Trade receivables
1,273,145
1,297,722
1,334,340
Trade payables
229,000
223,457
216,888
Fini
goods inventory
221,845
239,345
255,742
Raw materials inventory
385,126
431,448
478,752

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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