Question Tag: Cash Budget

Search 500 + past questions and counting.

  • Filter by Professional Bodies

  • Filter by Subject

  • Filter by Series

  • Filter by Topics

  • Filter by Levels

  • 30 Marks

PSAF – May 2024 – L2 – SA – Q1 – The Budgeting Process in the Public Secto

Cash budget preparation and analysis of budgeting systems.

The University of Okoko Consultancy Unit (Uniko Consult) provides training courses for staff, public and private individuals. The consultancy unit is currently collating information for its budget for the six months ending December 31, 2021. The following information is available:

(i) Provisional bookings for courses:

July Aug Sept Oct Nov Dec
Number of courses 0 2 4 3 4 4
Average number of attendees per course 0 16 8 16 8 12

No courses are run during the month of July. Uniko Consult requires intending participants to confirm their attendance in the week prior to the course, giving their credit card number as a guarantee. On average, 75% of provisional bookings are confirmed and therefore result in fee payment.

(ii) Course prices:
Each course lasts for three days, running from Friday to Sunday. The fee for each course is N120,000 per attendee. Any returning participant will be given a 25% discount on the fee. One in three of confirmed bookings is from a returning participant.

(iii) Personnel costs:
The courses are delivered by an experienced team of professors led by Emeritus Professor Omopinleola, who charges Uniko Consult N300,000 for each course. His assistant, Dr. Chukwuma, is paid a wage of N50,000 per course. Uniko Consult has several part-time support staff. Wages costs for July are only N100,000 per month, but every month thereafter amounts to N400,000. The consult is planning to increase wages by 5% from September. All staff are paid at the end of each month.

(iv) Property costs:
The University owns a Researchers’ Lodge, which includes an office, a kitchen, and two conference rooms. Uniko Consult rents the Researchers’ Lodge at a rental cost of N2,400,000 per annum, with rents being paid quarterly in advance on March 31, June 30, September 30, and December 31. However, the Consultancy Unit has received notice from the Bursar stating that, with effect from December 31, 2021, annual rental payments will increase by 5%.

(v) Food costs (Tea break and lunch):
All food items purchased are organic and delivered weekly by Uniko Farms. On the 5th of each month, Uniko Consult pays the bill for the previous month’s food deliveries. In December, Uniko Consult is also required to settle its bill for December due to the two-week holiday taken by Uniko Farm in January. The cost for food on each training course is N5,000 per attendee. However, inflation of 2% per month is expected from September onwards. Food costs for June 2021 are expected to be N110,000.

(vi) General overheads:
Uniko Consult’s annual running costs are N835,000, paid in ten equal instalments from April to January each year. Fuel costs of N420,000 per annum are paid through monthly direct debits. Due to a systems error, the direct debits from January to April failed, so the payment for July will include these outstanding amounts.

(vii) Capital expenditure:
Uniko Consult needs to replace three air conditioners by August at a cost of N180,000 each, with a 10% discount negotiated. The supplier allows the payment in two instalments—one in August and the other in October.

(viii) Bank account:
The balance on the Consultancy’s bank account is expected to be zero on June 30, 2021, but it has an adequate overdraft facility to cover any cash deficit.

(ix) Remittances:
The Consultancy Unit must remit 50% of its cash balance to the University’s account on a half-yearly basis.

Required:

a. Prepare a cash budget for each of the six months ending December 31, 2021.
Note: All workings should be rounded to the nearest N000. (20 Marks)

b. Enumerate the steps involved in Planning, Programming, and Budgeting Systems (PPBS). (7 Marks)

c. State and explain THREE characteristics of the performance budgeting system. (3 Marks)

Login or create a free account to see answers

Login
Register

Find Related Questions by Tags, levels, etc.

Report an error
  • 20 Marks

MI – Nov 2020 – L1 – SB – Q1 – Budgeting

Prepare the cash budget for the first three months of the year based on provided sales, expenses, and additional company details.

WXYZ is preparing for the first half of the next year. The following information was available:

a. Sales – 15% of monthly sales are in cash, while the balance is sold on credit. Collections from receivables are 50% in the first month after sales, 30% in the second month, and the balance in the third month after sales.
b. Purchases are usually 55% of sales and paid in the month of purchase.
c. Insurance company is expected to pay the sum of N525,000 in February based on the company’s accidented vehicles.
d. Salary deductions are paid on a preceding-month basis.
e. Company income tax of N475,550 will be paid in March.
f. Cash and cash equivalent balance as at December is N502,760.
g. Bank charges are 1% of total payments for the month.
h. Additional Information:

Month October (N) November (N) December (N) January (N) February (N) March (N)
Sales 750,000 600,000 850,000 520,000 670,000 800,000
Net Salaries 230,000 200,000 250,000 210,000 240,000 270,000
Other Expenses 200,700 187,500 197,500 177,200 187,500 192,700
Salaries Deductions 29,400 28,400 39,400 28,700 32,750 27,650

Required:
Prepare the cash budget for the first three months of the year. (Total 20 Marks)

Login or create a free account to see answers

Login
Register

Find Related Questions by Tags, levels, etc.

Report an error
  • 20 Marks

PM – May 2022 – L2 – SA – Q2 – Cash Budgeting and Working Capital

Preparation of a cash budget for Mega Laboratories PLC for the quarter ending June 30, 2021.

Mega Laboratories plc is a successful manufacturing company in the pharmaceutical industry. The company manufactures a number of household drugs. Since the advent of the Covid-2019 pandemic, its products have been in high demand. One of its newest products is known as vacineDcovid. In order to manufacture the product, a single raw material, Zithromax, is used.

Budgets are to be prepared for the quarter ending 30 June 2021, and the following information is available for this purpose:

(i) At 31 March 2021 various balances were as follows:

  • Receivables: N500,700
  • Creditors (suppliers of Zithromax): N153,000
  • Inventory of vacineDcovid: 20,300 units
  • Inventory of Zithromax: 200,000 kg

(ii) Extracts from the ‘standard cost card’ – vacineDcovid are as follows:

  • Direct material Zithromax, 10kg at N5.00 per kg: N50.00
  • Direct labour, 2 hours at N6.00 per hour: N12.00

(iii) Suppliers of Zithromax give two months credit to the company, whereas customers take one month’s credit.
(iv) Sales expectations for the quarter ending 30 June 2021 are as follows:

  • 25,000 units of vacineDcovid at a selling price of N95.00 per unit.
    (v) Assume that sales of vacineDcovid and purchases of Zithromax will be evenly spread over the three months to 30 June 2021.
    (vi) Depreciation relating to plant and machinery is N55,000 for the quarter ending 30 June 2021.
    (vii) Other expenses are paid immediately in cash and are estimated to be N200,000 for the quarter ending 30 June 2021.
    (viii) The anticipated inventory levels at 30 June 2021 are as follows:
  • Inventory of vacineDcovid: 15,000 units
  • Inventory of Zithromax: 150,500 kgs

(ix) Assume there is no work-in-progress and that stocks of vacineDcovid and Zithromax are valued at standard direct cost – see (ii) above.

Required:
For the quarter ending 30 June 2021 prepare:
a. A cash budget (amounts for each separate month are not required). (8 Marks)
b. Income Statement budget (clearly state any assumptions you have made). (5 Marks)
c. Briefly state the benefits of a Cash Budget to Mega Laboratories plc. (3 Marks)
d. Sales are often considered to be a principal budget factor of an organisation. Explain the meaning of a ‘principal budget factor’ and assuming that it is sales, explain how sales may be forecast, making appropriate reference to the use of statistical techniques and the use of computers. (4 Marks)

Login or create a free account to see answers

Login
Register

Find Related Questions by Tags, levels, etc.

Report an error
  • 10 Marks

PSAF – Nov 2020 – L2 – Q4a – The Budgeting Process in the Public Sector

Prepare a monthly cash budget for the fishpond from January to March 2020, considering expected sales, purchases, and allocation.

The Chairman of Okoko Local Government set up pond farming to fulfill a campaign promise. However, the Chairman is concerned about the project’s viability and its ability to finance itself due to increasing production costs. The expected cash-in-hand as of January 1, 2020, is N3,300,000.

The following information concerns the budgeted sales and purchases of the fish farm.

Month Sales (N’000) Purchases (N’000)
November 2019 55,000 35,000
December 2019 100,000 55,000
January 2020 114,000 75,000
February 2020 142,000 95,000
March 2020 145,000 80,000

Analysis of records shows that debtors settle according to the following pattern:

  • 70% within the month of sale
  • 30% in the following month

All purchases are on credit. Past experience shows that 80% of the purchase costs are settled in the month of the transaction, and the balance is settled in the subsequent month. Overhead costs amounting to 65% of the purchases of the month are to be paid monthly. Additionally, the Local Government will receive a monthly allocation of N15,000,000.

Required:

Prepare for the Chairman of Okoko Local Government a monthly cash budget for the fish pond for the first quarter (January to March) of 2020. (10 Marks)

Login or create a free account to see answers

Login
Register

Find Related Questions by Tags, levels, etc.

Report an error
  • 20 Marks

MI – May 2018 – L1 – SB – Q2 – Budgeting

Preparation of a cash budget for Orok Trading Company.

Orok Trading Company sells cement bags at N2,000 each. According to projections, it would sell 100 bags each in October, November, and December; and 120 bags per month in the succeeding months.

The company sells on credit, with customers paying 50% in the month following sale, and the balance 30 days later.

Other expected inflows are:

  • Sale of plant, N80,000 in January and N50,000 in February
  • Insurance claim, N50,000 in February
  • Damages from a lawsuit, N60,000 in March

The company purchases its products from a supplier who gives two months’ credit. The company’s cost of sale is 60%.

Projected outflows are:

  • Salaries of N30,000, paid monthly
  • Rent of N25,000, paid monthly
  • Other administrative expenses of N55,000 per month are settled as they arise.
  • Income tax of N25,000 payable in January
  • New asset, N40,000 to be purchased in January

The bank balance on December 31 is N235,000 negative.

You are required to:

  • Prepare a monthly Cash Budget for January to March. Show all workings.

Login or create a free account to see answers

Login
Register

Find Related Questions by Tags, levels, etc.

Report an error
  • 20 Marks

BMF – Nov 2022 – L1 – SB – Q3 – Basics of Business Finance and Financial Markets

Candidates are required to prepare a monthly cash budget for a three-month period based on the data provided for Homom Nigeria Limited.

The following information was extracted from the books of Homom Nigeria Limited.

Months Sales (₦’000) Materials (₦’000) Wages (₦’000) Overheads (₦’000)
February 40,000 20,400 7,600 3,800
March 42,000 20,000 7,600 4,200
April 46,000 19,600 8,000 4,600
May 50,000 20,000 8,400 4,800
June 60,000 21,600 9,000 5,000

Additional details regarding payments, credit sales, machine installation, and dividends are provided.

Required:
Prepare a monthly cash budget for the three months ending June 2022. Show your workings. (20 Marks)

Login or create a free account to see answers

Login
Register

Find Related Questions by Tags, levels, etc.

Report an error
  • 20 Marks

MI – May 2021 – L1 – SB – Q4 – Budgeting

Prepare a monthly cash budget for Wareroom Trading Limited for the first three months of 2020.

From the information below, prepare a monthly cash budget for Wareroom Trading Limited for the first three months of 2020 using a columnar format.

NOV 2019 DEC 2019 JAN 2020 FEB 2020 MAR 2020
Sales 850,000 950,000 720,000 750,000 780,000
Purchases 360,000 360,000 300,000 400,000 350,000
  1. All sales are on credit, collectable 50% in 30 days, 25% in 60 days, 20% in 90 days and balance regarded as bad debts.
  2. All purchases are also on credit, payable 40% in 30 days and 30% each in 60 and 90 days respectively.
  3. A new generator costing N455,000 will be acquired in February under a 30-day credit agreement.
  4. An old car will be sold for N50,000 cash in February.
  5. Monthly salaries are N80,000 payable as and when due.
  6. Commission on sales are 5% payable to sales agents 2 months in arrears.
  7. Company income tax of N235,000 is due and payable in January.
  8. An investment is expected to bring in N60,000 gross in February, subject to 10% withholding tax.
  9. The staff Christmas party in December is expected to cost the company a total of N90,000, though 60% of the expenses will be settled the following month.
  10. Assume an overdraft of N283,000 on 31 December 2019.

Login or create a free account to see answers

Login
Register

Find Related Questions by Tags, levels, etc.

Report an error
  • 20 Marks

BMF – May 2017 – L1 – SB – Q5 – Basics of Business Finance and Financial Markets

Preparation of a cash budget for XYZ Automobiles Nigeria Limited for the three months ending March 31, 2017.

The following projections relate to XYZ Automobiles Nigeria Limited.

Month Sales (N) Purchases (N) Wages (N) Overheads (N)
November 2016 400,000 204,000 76,000 38,000
December 2016 420,000 200,000 76,000 42,000
January 2017 460,000 196,000 80,000 46,000
February 2017 500,000 200,000 84,000 48,000
March 2017 600,000 216,000 90,000 50,000

Additional information:

  1. Cash balance on January 1, 2017, is expected to be N80,000.
  2. A plant will be installed in November 2016 at a cost of N1,000,000 and the monthly installment of N50,000 is payable from January 2017.
  3. A sum of N30,000 will be paid as dividends in the month of March 2017.
  4. Company income tax of N45,000 will be due for payment in March 2017.
  5. Advance payment of N800,000 in respect of a sale of a truck will be received in March 2017.
  6. In line with the company’s policy, 50% of sales are on a cash basis. 50% of credit sales are collected in the month immediately following the month of sales while the balance is paid a month after the payment of the first installment.
  7. All purchases are on credit and the creditors are paid fully two months after the month of purchase.
  8. Wages and overheads are paid as and when due.

Required:

Prepare a cash budget for each of the THREE months ending March 31, 2017.

Login or create a free account to see answers

Login
Register

Find Related Questions by Tags, levels, etc.

Report an error
  • 20 Marks

MI – Mar-Jul 2020 – L1 – SB – Q4 – Business Process Technologies

Prepare a monthly cash budget for Wareroom Trading Limited for the first three months of 2020 using a columnar format.

The following information relates to Wareroom Trading Limited:

Month NOV 2019 DEC 2019 JAN 2020 FEB 2020 MAR 2020
Sales (N) 850,000 950,000 720,000 750,000 780,000
Purchases (N) 360,000 360,000 300,000 400,000 350,000

Additional information:

  1. All sales are on credit, collectible 50% in 30 days, 25% in 60 days, 20% in 90 days, and balance regarded as bad debts.
  2. All purchases are also on credit, payable 40% in 30 days and 30% each in 60 and 90 days respectively.
  3. A new generator costing N455,000 will be acquired in February under a 30-day credit agreement.
  4. An old car will be sold for N50,000 cash in February.
  5. Monthly salaries are N80,000 payable as and when due.
  6. Commission on sales is 5% payable to sales agents 2 months in arrears.
  7. Company income tax of N235,000 is due and payable in January.
  8. An investment is expected to bring in N60,000 gross in February, subject to 10% withholding tax.
  9. The staff Christmas party in December is expected to cost the company a total of N90,000, though 60% of the expenses will be pushed for settlement the month following.
  10. Assume an overdraft of N283,000 on 31 December 2019.

Required:

Prepare a monthly cash budget for Wareroom Trading Limited for the first three months of 2020 using a columnar format. (Total 20 Marks)

Login or create a free account to see answers

Login
Register

Find Related Questions by Tags, levels, etc.

Report an error
  • 1 Marks

MI – May 2016 – L1 – SA – Q7 – Budgeting

Identify the budget that is not a functional budget from the given options.

The following are functional budgets EXCEPT:
A. Sales budget
B. Production budget
C. Distribution budget
D. Cash budget
E. Selling cost budget

Login or create a free account to see answers

Login
Register

Find Related Questions by Tags, levels, etc.

Report an error
  • 30 Marks

PSAF – May 2024 – L2 – SA – Q1 – The Budgeting Process in the Public Secto

Cash budget preparation and analysis of budgeting systems.

The University of Okoko Consultancy Unit (Uniko Consult) provides training courses for staff, public and private individuals. The consultancy unit is currently collating information for its budget for the six months ending December 31, 2021. The following information is available:

(i) Provisional bookings for courses:

July Aug Sept Oct Nov Dec
Number of courses 0 2 4 3 4 4
Average number of attendees per course 0 16 8 16 8 12

No courses are run during the month of July. Uniko Consult requires intending participants to confirm their attendance in the week prior to the course, giving their credit card number as a guarantee. On average, 75% of provisional bookings are confirmed and therefore result in fee payment.

(ii) Course prices:
Each course lasts for three days, running from Friday to Sunday. The fee for each course is N120,000 per attendee. Any returning participant will be given a 25% discount on the fee. One in three of confirmed bookings is from a returning participant.

(iii) Personnel costs:
The courses are delivered by an experienced team of professors led by Emeritus Professor Omopinleola, who charges Uniko Consult N300,000 for each course. His assistant, Dr. Chukwuma, is paid a wage of N50,000 per course. Uniko Consult has several part-time support staff. Wages costs for July are only N100,000 per month, but every month thereafter amounts to N400,000. The consult is planning to increase wages by 5% from September. All staff are paid at the end of each month.

(iv) Property costs:
The University owns a Researchers’ Lodge, which includes an office, a kitchen, and two conference rooms. Uniko Consult rents the Researchers’ Lodge at a rental cost of N2,400,000 per annum, with rents being paid quarterly in advance on March 31, June 30, September 30, and December 31. However, the Consultancy Unit has received notice from the Bursar stating that, with effect from December 31, 2021, annual rental payments will increase by 5%.

(v) Food costs (Tea break and lunch):
All food items purchased are organic and delivered weekly by Uniko Farms. On the 5th of each month, Uniko Consult pays the bill for the previous month’s food deliveries. In December, Uniko Consult is also required to settle its bill for December due to the two-week holiday taken by Uniko Farm in January. The cost for food on each training course is N5,000 per attendee. However, inflation of 2% per month is expected from September onwards. Food costs for June 2021 are expected to be N110,000.

(vi) General overheads:
Uniko Consult’s annual running costs are N835,000, paid in ten equal instalments from April to January each year. Fuel costs of N420,000 per annum are paid through monthly direct debits. Due to a systems error, the direct debits from January to April failed, so the payment for July will include these outstanding amounts.

(vii) Capital expenditure:
Uniko Consult needs to replace three air conditioners by August at a cost of N180,000 each, with a 10% discount negotiated. The supplier allows the payment in two instalments—one in August and the other in October.

(viii) Bank account:
The balance on the Consultancy’s bank account is expected to be zero on June 30, 2021, but it has an adequate overdraft facility to cover any cash deficit.

(ix) Remittances:
The Consultancy Unit must remit 50% of its cash balance to the University’s account on a half-yearly basis.

Required:

a. Prepare a cash budget for each of the six months ending December 31, 2021.
Note: All workings should be rounded to the nearest N000. (20 Marks)

b. Enumerate the steps involved in Planning, Programming, and Budgeting Systems (PPBS). (7 Marks)

c. State and explain THREE characteristics of the performance budgeting system. (3 Marks)

Login or create a free account to see answers

Login
Register

Find Related Questions by Tags, levels, etc.

Report an error
  • 20 Marks

MI – Nov 2020 – L1 – SB – Q1 – Budgeting

Prepare the cash budget for the first three months of the year based on provided sales, expenses, and additional company details.

WXYZ is preparing for the first half of the next year. The following information was available:

a. Sales – 15% of monthly sales are in cash, while the balance is sold on credit. Collections from receivables are 50% in the first month after sales, 30% in the second month, and the balance in the third month after sales.
b. Purchases are usually 55% of sales and paid in the month of purchase.
c. Insurance company is expected to pay the sum of N525,000 in February based on the company’s accidented vehicles.
d. Salary deductions are paid on a preceding-month basis.
e. Company income tax of N475,550 will be paid in March.
f. Cash and cash equivalent balance as at December is N502,760.
g. Bank charges are 1% of total payments for the month.
h. Additional Information:

Month October (N) November (N) December (N) January (N) February (N) March (N)
Sales 750,000 600,000 850,000 520,000 670,000 800,000
Net Salaries 230,000 200,000 250,000 210,000 240,000 270,000
Other Expenses 200,700 187,500 197,500 177,200 187,500 192,700
Salaries Deductions 29,400 28,400 39,400 28,700 32,750 27,650

Required:
Prepare the cash budget for the first three months of the year. (Total 20 Marks)

Login or create a free account to see answers

Login
Register

Find Related Questions by Tags, levels, etc.

Report an error
  • 20 Marks

PM – May 2022 – L2 – SA – Q2 – Cash Budgeting and Working Capital

Preparation of a cash budget for Mega Laboratories PLC for the quarter ending June 30, 2021.

Mega Laboratories plc is a successful manufacturing company in the pharmaceutical industry. The company manufactures a number of household drugs. Since the advent of the Covid-2019 pandemic, its products have been in high demand. One of its newest products is known as vacineDcovid. In order to manufacture the product, a single raw material, Zithromax, is used.

Budgets are to be prepared for the quarter ending 30 June 2021, and the following information is available for this purpose:

(i) At 31 March 2021 various balances were as follows:

  • Receivables: N500,700
  • Creditors (suppliers of Zithromax): N153,000
  • Inventory of vacineDcovid: 20,300 units
  • Inventory of Zithromax: 200,000 kg

(ii) Extracts from the ‘standard cost card’ – vacineDcovid are as follows:

  • Direct material Zithromax, 10kg at N5.00 per kg: N50.00
  • Direct labour, 2 hours at N6.00 per hour: N12.00

(iii) Suppliers of Zithromax give two months credit to the company, whereas customers take one month’s credit.
(iv) Sales expectations for the quarter ending 30 June 2021 are as follows:

  • 25,000 units of vacineDcovid at a selling price of N95.00 per unit.
    (v) Assume that sales of vacineDcovid and purchases of Zithromax will be evenly spread over the three months to 30 June 2021.
    (vi) Depreciation relating to plant and machinery is N55,000 for the quarter ending 30 June 2021.
    (vii) Other expenses are paid immediately in cash and are estimated to be N200,000 for the quarter ending 30 June 2021.
    (viii) The anticipated inventory levels at 30 June 2021 are as follows:
  • Inventory of vacineDcovid: 15,000 units
  • Inventory of Zithromax: 150,500 kgs

(ix) Assume there is no work-in-progress and that stocks of vacineDcovid and Zithromax are valued at standard direct cost – see (ii) above.

Required:
For the quarter ending 30 June 2021 prepare:
a. A cash budget (amounts for each separate month are not required). (8 Marks)
b. Income Statement budget (clearly state any assumptions you have made). (5 Marks)
c. Briefly state the benefits of a Cash Budget to Mega Laboratories plc. (3 Marks)
d. Sales are often considered to be a principal budget factor of an organisation. Explain the meaning of a ‘principal budget factor’ and assuming that it is sales, explain how sales may be forecast, making appropriate reference to the use of statistical techniques and the use of computers. (4 Marks)

Login or create a free account to see answers

Login
Register

Find Related Questions by Tags, levels, etc.

Report an error
  • 10 Marks

PSAF – Nov 2020 – L2 – Q4a – The Budgeting Process in the Public Sector

Prepare a monthly cash budget for the fishpond from January to March 2020, considering expected sales, purchases, and allocation.

The Chairman of Okoko Local Government set up pond farming to fulfill a campaign promise. However, the Chairman is concerned about the project’s viability and its ability to finance itself due to increasing production costs. The expected cash-in-hand as of January 1, 2020, is N3,300,000.

The following information concerns the budgeted sales and purchases of the fish farm.

Month Sales (N’000) Purchases (N’000)
November 2019 55,000 35,000
December 2019 100,000 55,000
January 2020 114,000 75,000
February 2020 142,000 95,000
March 2020 145,000 80,000

Analysis of records shows that debtors settle according to the following pattern:

  • 70% within the month of sale
  • 30% in the following month

All purchases are on credit. Past experience shows that 80% of the purchase costs are settled in the month of the transaction, and the balance is settled in the subsequent month. Overhead costs amounting to 65% of the purchases of the month are to be paid monthly. Additionally, the Local Government will receive a monthly allocation of N15,000,000.

Required:

Prepare for the Chairman of Okoko Local Government a monthly cash budget for the fish pond for the first quarter (January to March) of 2020. (10 Marks)

Login or create a free account to see answers

Login
Register

Find Related Questions by Tags, levels, etc.

Report an error
  • 20 Marks

MI – May 2018 – L1 – SB – Q2 – Budgeting

Preparation of a cash budget for Orok Trading Company.

Orok Trading Company sells cement bags at N2,000 each. According to projections, it would sell 100 bags each in October, November, and December; and 120 bags per month in the succeeding months.

The company sells on credit, with customers paying 50% in the month following sale, and the balance 30 days later.

Other expected inflows are:

  • Sale of plant, N80,000 in January and N50,000 in February
  • Insurance claim, N50,000 in February
  • Damages from a lawsuit, N60,000 in March

The company purchases its products from a supplier who gives two months’ credit. The company’s cost of sale is 60%.

Projected outflows are:

  • Salaries of N30,000, paid monthly
  • Rent of N25,000, paid monthly
  • Other administrative expenses of N55,000 per month are settled as they arise.
  • Income tax of N25,000 payable in January
  • New asset, N40,000 to be purchased in January

The bank balance on December 31 is N235,000 negative.

You are required to:

  • Prepare a monthly Cash Budget for January to March. Show all workings.

Login or create a free account to see answers

Login
Register

Find Related Questions by Tags, levels, etc.

Report an error
  • 20 Marks

BMF – Nov 2022 – L1 – SB – Q3 – Basics of Business Finance and Financial Markets

Candidates are required to prepare a monthly cash budget for a three-month period based on the data provided for Homom Nigeria Limited.

The following information was extracted from the books of Homom Nigeria Limited.

Months Sales (₦’000) Materials (₦’000) Wages (₦’000) Overheads (₦’000)
February 40,000 20,400 7,600 3,800
March 42,000 20,000 7,600 4,200
April 46,000 19,600 8,000 4,600
May 50,000 20,000 8,400 4,800
June 60,000 21,600 9,000 5,000

Additional details regarding payments, credit sales, machine installation, and dividends are provided.

Required:
Prepare a monthly cash budget for the three months ending June 2022. Show your workings. (20 Marks)

Login or create a free account to see answers

Login
Register

Find Related Questions by Tags, levels, etc.

Report an error
  • 20 Marks

MI – May 2021 – L1 – SB – Q4 – Budgeting

Prepare a monthly cash budget for Wareroom Trading Limited for the first three months of 2020.

From the information below, prepare a monthly cash budget for Wareroom Trading Limited for the first three months of 2020 using a columnar format.

NOV 2019 DEC 2019 JAN 2020 FEB 2020 MAR 2020
Sales 850,000 950,000 720,000 750,000 780,000
Purchases 360,000 360,000 300,000 400,000 350,000
  1. All sales are on credit, collectable 50% in 30 days, 25% in 60 days, 20% in 90 days and balance regarded as bad debts.
  2. All purchases are also on credit, payable 40% in 30 days and 30% each in 60 and 90 days respectively.
  3. A new generator costing N455,000 will be acquired in February under a 30-day credit agreement.
  4. An old car will be sold for N50,000 cash in February.
  5. Monthly salaries are N80,000 payable as and when due.
  6. Commission on sales are 5% payable to sales agents 2 months in arrears.
  7. Company income tax of N235,000 is due and payable in January.
  8. An investment is expected to bring in N60,000 gross in February, subject to 10% withholding tax.
  9. The staff Christmas party in December is expected to cost the company a total of N90,000, though 60% of the expenses will be settled the following month.
  10. Assume an overdraft of N283,000 on 31 December 2019.

Login or create a free account to see answers

Login
Register

Find Related Questions by Tags, levels, etc.

Report an error
  • 20 Marks

BMF – May 2017 – L1 – SB – Q5 – Basics of Business Finance and Financial Markets

Preparation of a cash budget for XYZ Automobiles Nigeria Limited for the three months ending March 31, 2017.

The following projections relate to XYZ Automobiles Nigeria Limited.

Month Sales (N) Purchases (N) Wages (N) Overheads (N)
November 2016 400,000 204,000 76,000 38,000
December 2016 420,000 200,000 76,000 42,000
January 2017 460,000 196,000 80,000 46,000
February 2017 500,000 200,000 84,000 48,000
March 2017 600,000 216,000 90,000 50,000

Additional information:

  1. Cash balance on January 1, 2017, is expected to be N80,000.
  2. A plant will be installed in November 2016 at a cost of N1,000,000 and the monthly installment of N50,000 is payable from January 2017.
  3. A sum of N30,000 will be paid as dividends in the month of March 2017.
  4. Company income tax of N45,000 will be due for payment in March 2017.
  5. Advance payment of N800,000 in respect of a sale of a truck will be received in March 2017.
  6. In line with the company’s policy, 50% of sales are on a cash basis. 50% of credit sales are collected in the month immediately following the month of sales while the balance is paid a month after the payment of the first installment.
  7. All purchases are on credit and the creditors are paid fully two months after the month of purchase.
  8. Wages and overheads are paid as and when due.

Required:

Prepare a cash budget for each of the THREE months ending March 31, 2017.

Login or create a free account to see answers

Login
Register

Find Related Questions by Tags, levels, etc.

Report an error
  • 20 Marks

MI – Mar-Jul 2020 – L1 – SB – Q4 – Business Process Technologies

Prepare a monthly cash budget for Wareroom Trading Limited for the first three months of 2020 using a columnar format.

The following information relates to Wareroom Trading Limited:

Month NOV 2019 DEC 2019 JAN 2020 FEB 2020 MAR 2020
Sales (N) 850,000 950,000 720,000 750,000 780,000
Purchases (N) 360,000 360,000 300,000 400,000 350,000

Additional information:

  1. All sales are on credit, collectible 50% in 30 days, 25% in 60 days, 20% in 90 days, and balance regarded as bad debts.
  2. All purchases are also on credit, payable 40% in 30 days and 30% each in 60 and 90 days respectively.
  3. A new generator costing N455,000 will be acquired in February under a 30-day credit agreement.
  4. An old car will be sold for N50,000 cash in February.
  5. Monthly salaries are N80,000 payable as and when due.
  6. Commission on sales is 5% payable to sales agents 2 months in arrears.
  7. Company income tax of N235,000 is due and payable in January.
  8. An investment is expected to bring in N60,000 gross in February, subject to 10% withholding tax.
  9. The staff Christmas party in December is expected to cost the company a total of N90,000, though 60% of the expenses will be pushed for settlement the month following.
  10. Assume an overdraft of N283,000 on 31 December 2019.

Required:

Prepare a monthly cash budget for Wareroom Trading Limited for the first three months of 2020 using a columnar format. (Total 20 Marks)

Login or create a free account to see answers

Login
Register

Find Related Questions by Tags, levels, etc.

Report an error
  • 1 Marks

MI – May 2016 – L1 – SA – Q7 – Budgeting

Identify the budget that is not a functional budget from the given options.

The following are functional budgets EXCEPT:
A. Sales budget
B. Production budget
C. Distribution budget
D. Cash budget
E. Selling cost budget

Login or create a free account to see answers

Login
Register

Find Related Questions by Tags, levels, etc.

Report an error

Elevate your professional expertise across key business domains with our comprehensive training programs

Our offerings

Contact Info

  • +233203701923
    +233543919232
  • info@knowsia.com

Customer

Get In Touch

Follow us on our social media and get daily updates.

Facebook-f Twitter Linkedin-in Envelope