cash budget

[mhdramadan]

أرجوا المساعدة في حلها من أهل الأختصاص

Yasmeen has been recently appointed as accounting manager in the famous Abou Sina Pharmaceutical Company, a small family business run by Abou Sina himself. Its main activity is the distribution of pharmaceuticals acting as a liaison between factories and pharmacies. Yasmeen’s first assignment is to prepare the budget for the last four months of 2008. The usual form used for the cash flow budget is shown below but you can amend it as needed or even use you own if you prefer

Cash Budget

Sep

Oct

Nov

Dec

Estimated Cash Receipts

From Credit Customers

From Cash Sales

Proceeds from fixed asset disposals

= Total Cash Receipts

Estimated Cash Payments

Suppliers

Wages and Salaries

Fixed Asset Purchases

Rent and Rates

Other Overheads

Loan Repayments

= Total Cash Payments

= Net Surplus (or deficit)

Opening Cash Balance

1.100.000

= Closing Cash Balance

After going through the files of her predecessors and after some discussions with her colleagues, Yasmeen was able to collect the following information, which she considers reliable enough:

* Expected Sales: 1.000.000 SYP every month except September (Ramadan) when the sales doubles. Usually 40% of sales are on cash basis and the usual credit terms are 30 days. Except in Ramadan, where 75% of sales are cash!

* The company puts a 35% mark-up on its purchases from its suppliers, who insist on a 25% downpayment when placing the order one month ahead of delivery, and the balance 75% is payable on delivery. It is the company’s policy to keep at all time in stock 500.000 SYP worth of goods (selling price).

* The owner, Mr. Abou Sina, has a very beautiful secretary and rumour has it that Abou Sina is planning to leave his wife Im Sina and only son, Sina, and marry his secretary in October just after the Fitr Holidays. He is planning to buy her a solitaire for 550.000 SYP as a wedding present.

* It is also expected that one of the used vans of the company be sold in November for 600.000 SYP and replaced in December with a new one paid cash 1.500.000 SYP

* The monthly salaries of all the employees in the firm, including the very beautiful secretary, are 150.000 SYP and Abou Sina usually gives an end-of-year bonus equal to the monthly salary to all the employees, including the very beautiful secretary. The monthly rent is 20.000 SYP but it is paid every three months. The last payment was on June 15.

* A loan from the bank for 1.250.000 SYP is due on Nov 23.

* On average, Abou Sina’s expenses are about 30.000 SYP per month

* In last year’s financial reports, it is stated that the depreciation of the machines and equipment is

120.000 SYP per annum.

1- Can you help Yasmeen prepare the budget on time, bearing in mind that some of the information she collected is not really necessary to prepare that budget but is just office gossip!!!

2- Also please prepare the budgeted income statement for the same period.

3- Write what Yasmeen could have written to her boss in the form of an office memo that would accompany the prepared budgets including her notes and comments on both budgets and what could be in order to minimize the risk of being unable to pay the liabilities on time.

أرجوا أرسال الحلول الى

mhdramadan@gmail.com