Explore BrainMass

Explore BrainMass

    Prepare Cash Budget - Ace Traders

    This content was COPIED from BrainMass.com - View the original, and get the already-completed solution here!

    Good Day,

    Please assist with the attached question.

    Regards

    The following information pertains to Ace Traders for the three months ended 31 May 2007.

    Actual March Budgeted
    April May
    R R R
    Sales (20% for cash and 80% on credit) 360 000 380 000 400 000
    Purchases (10% for cash and 90% on credit) 240 000 280 000 320 000
    Salaries and Wages Paid 40 000 60 000 60 000
    Cash Expenses 24 000 28 000 32 000
    Depreciation 2 000 2 000 2 000

    Additional Information:
    1. It is expected that debtors will settle their accounts as follows:
    - 20% in the month of sale
    - 70% in the month after the month of sale, and
    - 5% in the second month after the month of sale.

    1. The remaining 5% is usually written off as bad debts.
    2. Trade creditors are paid in the month after the purchases at a discount of 5%.
    3. 50% of the salaries and wages are weekly wages. Because wages are paid weekly, usually 10% of the wages are paid in the month following the month in which they were incurred.
    4. Expenses are paid as they arise.
    5. The favourable bank balance on 1 April was R14 800.

    REQUIRED:
    Prepare the Cash Budget of Ace Traders for April and May 2007.

    © BrainMass Inc. brainmass.com June 3, 2020, 8:51 pm ad1c9bdddf
    https://brainmass.com/business/cash-budgeting/prepare-cash-budget-ace-traders-155915

    Attachments

    Solution Summary

    The expert prepares cash budgets for Ace Traders.

    $2.19

    ADVERTISEMENT