Cash budget.docx - Question 1 On 1 April 20X0 Simplex Ltd commenced business with a cash balance of \$30 000 Sales for the next six months are expected

# Cash budget.docx - Question 1 On 1 April 20X0 Simplex Ltd...

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Question 1. On 1 April 20X0 Simplex Ltd commenced business with a cash balance of \$30 000. Sales for the next six months are expected to be: April \$40 000 July \$200 000 May \$60 000 August \$250 000 June \$120 000 September \$100 000 Sixty percent of sales are expected to be cash sales . Twenty-five percent of credit sales are collected in the month of sale and 75% in the month following sale . Cash expenses are expected total \$29,600 in April, \$40,200 in May and \$50,600 in June. Required: Prepare a cash budget for the months of April, May and June. Comment on the results Solutions: Sales April May June Sales 40 000 60 000 120 000 Cash sales (60%) 24 000 36 000 72 000 Credit sales (40%) 16 000 24 000 48 000 Collections April May June Cash sales 24 000 36 000 72 000 Credit sales In the month of sale (25%) 4 000 6 000 12 000 Month following sale (75%) 0 12 000 18 000 Total 28 000 54 000 102 000 Cash Budget April May June O.B. in cash 30 000 28 400 42 200 collections 28 000 54 000 102 000 payments 29 600 40 200 50 600 C.B. in cash 28 400 42 200 93 600
Question 2. On 1 April 20X0 Simplex Ltd commenced business with a cash balance of \$60 000. Sales for the next six

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