Lion Ltd. has the following budgeted sales units. Each unit sells for 10. The cash...
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Accounting
Lion Ltd. has the following budgeted sales units. Each unit sells for 10. The cash from the sales will be received as follows: 30% cash less an 8% discount. The remaining sales will be on credit and will be received as follows: 50% on one month's credit with a 5% discount 40% two months credit 10% will go bad 1a) Show the cash budget extract for receipts, showing for each month the cash received from sales in January. February, March and April. (9 marks) 1b) Describe in detail one way in which 'bad debts' can be avoided. ( 6 marks) 1c) Give two reasons for why companies prepare cash budgets. ( 6 marks) 1d) Discuss in detail ONE consequence of a company having poor liquidity. (4 marks)
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