drugs store

Topics: Balance sheet, Budget, Accounts receivable Pages: 3 (497 words) Published: October 7, 2014
Class Name
Module

PTGDip10
Accounting for Managers

Individual Assignment 30% (40 marks)
Date Due:
Extract from module learning outcomes.
Topic F: Budgeting
Understand the process of budget preparation including those relating to cash flow. Upon successful completion of this topic, students should be able to: 1. Describe the purpose of budgeting and budgeting control.

2. Describe the differences between fixed and flexible budgets. 3. Outline the behavioural consequences of a budgetary control system.

Question
Kobayashi LLP wants a cash budget for the next three months, beginning January 1, 2015. The company desires an ending minimum cash balance of $10,000 each month. An open line of credit is available at a local bank for any borrowing that may be needed during the quarter. All borrowing is done at the beginning of a month, and all repayments are made at the end of a month. Borrowings and repayments of principal must be in multiples of $1,000. Interest is paid only at the time of payment of principal. The interest rate is 12 percent per annum. (Calculate interest on whole months, e.g., 1/12, 2/12)

The following data have been gathered for the preparation of the cash budget for the first quarter of 2015:

a) Balance sheet as at 31 December 2014 are as follows:
Kobayashi LLP
Balance Sheet as at 31 December 2014
Assets
Cash
Accounts receivable
Inventory
Plant and equipment, net
Total
Liabilities and Equity
Accounts payable
Capital stock
Retained earnings
Total

b)

$
20,000
200,000
80,000
500,000
800,000
$
98,000
500,000
202,000
800,000

Actual sales for December 2014 and budgeted sales for the next four months are as follows:
December (actual) . . . . . . . . $250,000
January . . . . . . . . . . . . . . . . 350,000
February . . . . . . . . . . . . . . . . 400,000
March . . . . . . . . . . . . . . . . .

500,000

April . . . . . . . . . . . . . . . . . .

400,000

c)

Sales are 20 percent for cash and...
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