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Task 3
Craig’s Book Wholesaler advises you of the following:
- Opening Bank Balance as at 1st July $17,000
- Net Sales
| May (actual) |
June (actual) |
July (budget) |
August (budget) |
September (budget) |
| $18,000 | $16,000 | $15,000 | $16,400 | $18,000 |
Sales are 60% credit and 40% for cash.
Account customers normally pay as follows:
- 40% in the month of sale, and earn a 5% discount
- 30% in the month after the sale with no discount allowed
- 25% in the second month after the sale with no discount allowed
- The remaining 5% are Bad Debts
Rental income is $5,000 per month
Council rates of $1,600 are due to be paid in September.
All Purchases are paid for in the month after purchase and are expected to be:
| June (actual) |
July (budget) |
August (budget) |
September (budget) |
| $3,800 | $2,800 | $3,600 | $4,000 |
Operating Expenses which are paid in the current month are expected to be:
| Marketing ($) | Admin & General ($) | |
| July | 800 | 1,200 |
| August | 560 | 1,520 |
| September | 640 | 1,320 |
Administration and general expenses include depreciation of $200 per month.
Required:
From the information above, prepare a cash budget for each of the three months July, August and September (ignore GST and calculations to the nearest dollar). This budget should be broken down into three sections, Cash Receipts, Cash Payments and a Cash Budget summary.
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