Question 3 (CLO 3) Marks) The Abu Dhabi Mall Establishment is preparing its budg

Question

Question 3 (CLO 3) Marks) The Abu Dhabi Mall Establishment is preparing its budget for the year 2015 following data in coordination with the credit department (7 . The cost accountant has compiled the (1 Mark each) a) Credit sales are budgeted at 100,000, 120,000, 130,000 40,000, 150,000 and 160,000 for the months of January through June 2015 respectively b) The collection of the credit sales has been established by the credit department as follows 1) 50% of the credit sales will be collected in the month of sale, 2) 20% of the credit sales will be collected in the first month after sale 3) 30% of the credit sales will be collected in the second month after sale c) The cost of purchases of raw materials is budgeted at S20,000 in January, $40,000 in February, $60,000 in March, S70,000 in April, $50,000 in May and $30,000 in June d) Wages are budgeted at S10,000 per month e) Overhead costs are budgeted at 25,000 for each month January through March and 35,000 for each month April through June and $20,000 in June to $10,000 f) Income taxes are budgeted to be paid $10,000 in March g The cash on hand at the beginning of the year amounted Required Prepare the cash budget for the six months ended June 30, 2015. BACC 210 ASSIGNMENT 1 SUMMER-2,2018

Explanation / Answer

Solution:

Abu Dhabi Mall Establishment Computation of expected cash collection of Credit Sales Particulars January February March April May June Collection of credit sales from January $50,000.00 $20,000.00 $30,000.00 Collection of credit sales from February $60,000.00 $24,000.00 $36,000.00 Collection of credit sales from March $65,000.00 $26,000.00 $39,000.00 Collection of credit sales from April $70,000.00 $28,000.00 $42,000.00 Collection of credit sales from May $75,000.00 $30,000.00 Collection of credit sales from June $80,000.00 Total Expected Cash Collection $50,000.00 $80,000.00 $119,000.00 $132,000.00 $142,000.00 $152,000.00

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