Lo4 POA mays
zaid88
2 years ago
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files (2)LO4maysoun.docx
LO4maysounn.xlsx
LO4maysoun.docx
Task 4: Learning outcome 4
After completing the first task, your supervisor has asked you to work with a client named Miss. Bennet to assist her in preparing a cash budget. It can be used to inform efficient resource allocation and support effective control and decision-making, Miss. Bennet starts a small business cleaning office on a trading estate in Amman, Jordan.
If you know that the Fiscal year begins on 01/01 and ends on 31/12, and the account balances of beginning year are as follows:
|
Account |
£ |
|
Cash |
400,000 |
|
Accounts receivable |
50,000 |
|
Accounts payable |
60,000 |
|
Selling and General administrative expenses |
50,000 |
In addition, the company estimates its sales and purchases for the next three months, from the beginning of the January to the end of April according to the following schedules:
|
Month |
Budgeted Sales |
Budgeted Purchases |
|
January |
£120,000 |
£600,000 |
|
February |
£250,000 |
£120,500 |
|
March |
£160,000 |
£70,000 |
|
April |
£260,000 |
£160,000 |
|
Total |
790,000 |
415,000 |
Instructions:
From the data given above Prepare a cash budget using a spreadsheet. Considering the information listed below.
· Preparing a Scheduled of expected cash collection proceeds from sales, if you know that the company's policy when selling states that 70% of sales are collected during the month of sale, and 30% of sales are collected during the following month.
· Prepare a Scheduled of expected cash disbursement for purchases, if you know that the company pays 50% of the purchases during the month of purchase and pays 50% of the purchases during the following month.
· Management would like to have a cash balance at least 3,000 at the beginning of each Month.
· The board of director has approved cash dividend of 4,000 for March.
· Management planes to spend 8,000 on equipment purchase on April.
Discuss the benefits and limitations of budgets and budgetary control systems for the given business. Identify the cash problem revealed by budgetary planning that might facing in businesses and recommend corrective actions that can be taken by management by justifying how that solution can ensure better decision making and efficient use of resources in business.
LO4maysounn.xlsx
Q-information
| LO4: Cash Budget preparation | |||
| Q: If you know that, the fiscal year of XYZ Company begins on 01/01 and ends on 31/12, and the beginning account balances as follows: | |||
| cash balance | 400000 | ||
| Accounts receivable | 50000 | ||
| Accounts payable | 60000 | ||
| Administrative expenses | 50000 | ||
| In addition, the company estimates its sales and purchases from the beginning of the month of January until the end of April according to the following schedules: | |||
| Month | Budgeted Revenues | Budgeted purchases | |
| January | 120000 | 600000 | |
| February | 250000 | 120500 | |
| March | 160000 | 70000 | |
| April | 260000 | 160000 | |
| Total | 790000 | 950500 | |
policy
| From the data given above Prepare a cash budget using a spreadsheet.in addition use the below information: | |||||||||||||||||
| 1 | Preparing a Scheduled of expected cash collection proceeds from sales, if you know that the company's policy when selling states that : 70% of sales are collected during the month of sale, and 30% of sales are collected during the following month. | ||||||||||||||||
| 2 | Prepare a Scheduled of expected cash disbursement for purchases, if you know that the company pays: 50% of the purchases during the month of purchase, and pays 50% of the purchases during the following month. | ||||||||||||||||
| 3 | Management would like to have a cash balance at least 3,000 at the beginning of each. | 3000 | |||||||||||||||
| 4 | The board of director has approved cash dividend of 4,000 for March | 4000 | |||||||||||||||
| 5 | Management planes to spend 8,000 on equipment purchase on April. | 8000 |
T1-cash collection
| Prepare Scheduled of expected cash collection as follows: | ||||||
| Month | 1 | 2 | 3 | 4 | Total | |
| Budgeted revenue | ||||||
| company collection policy | on the month of sale | |||||
| the following month | ||||||
| 1 | 2 | 3 | 4 | Total | ||
| Beg.Account receivables | ||||||
| January | ||||||
| February | ||||||
| March | ||||||
| April | ||||||
| Total | ||||||
T2-cash disbursement
| Prepare Scheduled of expectedcash disbursement as follows: | ||||||
| Month | 1 | 2 | 3 | 4 | Total | |
| Budgeted Purchases | ||||||
| company collection policy | on the month of sale | |||||
| the following month | ||||||
| 1 | 2 | 3 | 4 | Total | ||
| Beg.Account payable | ||||||
| January | ||||||
| February | ||||||
| March | ||||||
| April | ||||||
| Total | ||||||
cash Budget
| Preparing the cash budget | ||||||
| 1 | 2 | 3 | 4 | Total | ||
| Beginning,cash balance | ||||||
| Add(+) cash receipts : | ||||||
| Total cash collection (T1) | ||||||
| A | Total cash available | |||||
| Less(-) cash disbursement : | ||||||
| Total cash disbursement (2) | ||||||
| Administrative expenses | ||||||
| Cash dividends | ||||||
| Equipment purchases | ||||||
| B | Total cash disbursement | |||||
| A-B = | Excess ( deficiency ) of cash available for disbursements | |||||
| Financing | ||||||
| Ending,cash balance |
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