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Question: the following are the actual results for may and june...

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The following are the actual results for May and June and budgeted results for July, August and September of Aqua Pty Ltd.

  May June July Aug Sep
Total purchases $45000 $48000 $46000 $47000

$44000

Total sales $80000 $77000 $81000 $85000 $82000

Purchases are paid for 70% in the month of purchase and 30% in the following month. Purchases are invoiced on the last day of the month. Other costs amount to $34,500 per month are paid in cash.

15% of sales are cash sales. Credit sales are invoiced on the last day of the month. Of the credit sales, 65% are collected within one month of the invoice date and the remaining are collected during the second month after invoice date.

The cash balance on 30 June is $12,495. The desired cash balance of the business is $13,000. If the business will be short of this, then it can take a bank overdraft and when the business will have sufficient cash balance t will pay off its liabilities.

Required:

Read the information above to establish/confirm the budgetary milestones and performance indicators for Aqua Pty Ltd.

  1. a) Prepare a cash budget (based on the milestones and performance indicators) for the months of July, August and September so that the business can check if it has enough funds to pay off its liabilities. Assume the business is not registered for GST.
  2. b) Confirm whether or not the budget objectives for July, August and September are in line with Aqua Pty Ltd overall aims and would be consistent with other projects and future forecasts. (1-2 sentences)
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