Problem
The following data relate to Bookshop Ltd:
The financial manager has made the following sales forecasts
for the first five months of the coming year, commencing from April :
Month Sales$
April
May
June
July
Auqust
Other data:
i Debtors' and creditors' balance at the beginning of the year are $ and $ The
balance of other relevant assets and liabilities are:
ii sales are on cash basis. Credit sales are collected in the month following the sale.
iii Cost of sales in per cent on sales.
iv The only other variable cost is a commission to sales agents. The Sales Commission is paid in
a month after it is earned. respectively
iv Inventory stock is kept equal to sales requirements for the next two month budgeted sales
v Trade creditors are paid in the following month after purchases.
vii Fixed costs are $ per month including $ depreciation.
You are required to prepare a cash budget for the months of April, May and June respectively.
