The following are the estimates of the expected cash flows of Al Tayebat Company during the first six months of 2016 AD: Details January February March Expected 500000 500000 550000 600000 600000 550000 April May June sales Expected 260000 280000 320000 320000 320000 280000 Purchases wages 80000 80000 80000 80000 80000 80000 30000 30000 30000 30000 30000 30000 rent expenses other 10000 10000 10000 10000 10000 10000 expenses equipment 400000 purchases Insurance 120000 Knowing : The cash balance on December 31, 2015 was estimated at 150,000 riyals. The credit policy adopted by the company with regard to its sales is as follows: 40% in the month of sale, 20% in the first month following the month of sale, and 40% in the second month following the month of sale. The credit policy granted to the company in relation to its purchases is as follows: 60% in the month of purchase and 40% in the second month following the manth of purchase. The rest of the expenses of wages, rent, insurance and various expenses paid in cash. The credit policy granted in connection with the purchase of equipment is one month from the date of purchase. The cash balance to be kept at the end of each month is 100,000 riyals :- December and November sales respectively. 550,000 - 500,000 December and November purchases, respectively. 280,000 - 260,000 - In the event that the cash balance falls below the amount to be kept at the end of the month, the company resorts to short-term borrowing from banks, but in the event of a surplus in any month, it is used to pay off loan installments, if any. Required: Preparing the cash budget for the first semester of 2016.
The following are the estimates of the expected cash flows of Al Tayebat Company during the first six months of 2016 AD: Details January February March Expected 500000 500000 550000 600000 600000 550000 April May June sales Expected 260000 280000 320000 320000 320000 280000 Purchases wages 80000 80000 80000 80000 80000 80000 30000 30000 30000 30000 30000 30000 rent expenses other 10000 10000 10000 10000 10000 10000 expenses equipment 400000 purchases Insurance 120000 Knowing : The cash balance on December 31, 2015 was estimated at 150,000 riyals. The credit policy adopted by the company with regard to its sales is as follows: 40% in the month of sale, 20% in the first month following the month of sale, and 40% in the second month following the month of sale. The credit policy granted to the company in relation to its purchases is as follows: 60% in the month of purchase and 40% in the second month following the manth of purchase. The rest of the expenses of wages, rent, insurance and various expenses paid in cash. The credit policy granted in connection with the purchase of equipment is one month from the date of purchase. The cash balance to be kept at the end of each month is 100,000 riyals :- December and November sales respectively. 550,000 - 500,000 December and November purchases, respectively. 280,000 - 260,000 - In the event that the cash balance falls below the amount to be kept at the end of the month, the company resorts to short-term borrowing from banks, but in the event of a surplus in any month, it is used to pay off loan installments, if any. Required: Preparing the cash budget for the first semester of 2016.
Financial Accounting Intro Concepts Meth/Uses
14th Edition
ISBN:9781285595047
Author:Weil
Publisher:Weil
Chapter1: Introduction To Business Activities And Overview Of Financial Statements And The Reporting Process
Section: Chapter Questions
Problem 38P
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Transcribed Image Text:The following are the estimates of the expected cash flows of Al Tayebat Company
during the first six months of 2016 AD:
Details
January February March
April
Аprl
May
June
Expected
500000
500000
550000 600000 600000 550000
sales
Expected
260000
280000
320000
320000
320000
280000
Purchases
wages
80000
80000
80000
80000
80000
80000
rent
30000
30000
30000
30000
30000
30000
expenses
other
10000
10000
10000
10000
10000
10000
expenses
equipment 400000
purchases
Insurance
120000
Knowing :
The cash balance on December 31, 2015 was estimated at 150,000 riyals.
The credit policy adopted by the company with regard to its sales is as follows: 40%
in the month of sale, 20% in the first month following the month of sale, and 40% in
the second month following the month of sale.
The credit policy granted to the company in relation to its purchases is as follows:
60% in the month of purchase and 40% in the second month following the manth of
purchase.
The rest of the expenses of wages, rent, insurance and various expenses paid in
cash.
The credit policy granted in connection with the purchase of equipment is one
month from the date of purchase.
The cash balance to be kept at the end of each month is 100,000 riyals
L
- December and November sales respectively: 550,000 - 500,000
December and November purchases, respectively: 280,000 - 260,000
- In the event that the cash balance falls below the amount to be kept at the end of
the month, the company resorts to short-term borrowing from banks, but in the event
of a surplus in any month, it is used to pay off loan installments, if any.
Required: Preparing the cash budget for the first semester of 2016.
For Al Tayebat Company
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