The following information was extracted from ABC Ltd’s financial statements for the year ended 31 December 2019. Sales on 30 November 2019 were K100 million and K110 million on 31 December 2019. For the year 2020, sales are expected to double at a constant monthly rate.80% of the sales made are on account; the remainder on cash.From past experience, 5% of the receivables have turned out to be irrecoverable.Credit customers pay as follows:75% in the month following the sale;15% two months after the sale month.Inventory levels are maintained at 20% of the following month’s sales.Accounts payables are at settled at 30 days after purchase. Required:Prepare a cash forecast for the three-month period from January to March 2020.

Cash forcasting is a plan that shows flow of cash in and out of organisation. It shows the future…

Answered: The following information was extracted…

Principles of Accounting Volume 1

19th Edition

ISBN:9781947172685

Author:OpenStax

Publisher:OpenStax

Chapter9: Accounting For Receivables

Section: Chapter Questions

Problem 8PB: The following select financial statement information from Vortex Computing. Compute the accounts...

See similar textbooks

Related questions

Question

The following information was extracted from ABC Ltd’s financial statements for the year ended 31 December 2019.

Sales on 30 November 2019 were K100 million and K110 million on 31 December 2019. For the year 2020, sales are expected to double at a constant monthly rate.
80% of the sales made are on account; the remainder on cash.
From past experience, 5% of the receivables have turned out to be irrecoverable.
Credit customers pay as follows:
1. 75% in the month following the sale;
2. 15% two months after the sale month.
Inventory levels are maintained at 20% of the following month’s sales.
Accounts payables are at settled at 30 days after purchase.

Required:

Prepare a cash forecast for the three-month period from January to March 2020.

Expert Solution

Step by step

Solved in 2 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.

Similar questions