QUESTION 2
Xhana Ltd.is a dealer in motor vehicle parts. The information in the table below and the
additional information relate to the business.
Forecast income and expenditure for June-September
Details
June July August September
Cash sales 6,400 7,800 6,700 7,300
Credit sales 6,700 9,100 4,600 5,700
Expenditure
Salaries 2,100 2,100 2,100 2,100
Inventories purchases 5,500 6,100 8,400 7,500
Additional information
i. The bank balance at the beginning of July was P2,200
ii. Credit sales receipts are 60% in the month of sales and 40% in the following month.
iii. Other expenses are paid for in the month in which they are incurred
iv. Inventories purchases are paid for 40% in the month of purchase and 60% in the following
month.
v. A staff canteen kitchen equipment is to be purchased in July and paid for in three months
with a deposit of P2,000 in July and installments of P4,000 in August and P2,000 in September
Required:
Prepare a cash budget for the company for the months July, August and September.