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Question: the following gives particulars of actual results for may and...

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

 

 

May

June

July

Aug

Sept

Total Purchases

$35,000

$38,000

$36,000

$37,000

$34,000

Total Sales

$70,000

$67,000

$71,000

$75,000

$72,000

 

Purchases are paid for 65% in the month of purchase and 35% in the following month. Purchases are invoiced on the last day of the month. Other costs amount to $24,500 per month are paid in cash.

25% 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 $10,495. The desired cash balance of the business is $25,000. 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:

1.     Prepare a cash budget for the months of July, August and September.

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