CHAPTER 16 Sample Solution


Purchase is 75% of the following month’s sales. This is because gross profit is 25% of sales.


Opening Debtors figure €12,000 (a)


Receipts Cash Sales


Credit Sales 1


Payments Purchases 1 Rent


Vehicles


Equipment Wages Rates


Loan Repayment with Interest


Net Monthly Cash flow Loan


Opening Cash Closing Balance


[1] [2]


56,500 (500) 5,000 1,000 5,500


55,000 [1]


5,500 7,900


83,600


2,400 (27,200) [1]


[1]


25,000 7,900 5,700


[1] [1]


65,500 (6,300) 6,000 5,700 5,400


Paid for it all in March. Remember a cash budget tracks money in and out.


Remember you can only borrow in multiples of 1,000.


1,500 + 75 = 1,575


Cash €1,000 given in the question.


Depreciation is a non-cash expense. This is why depreciation is not in the cash budget.


Cash Budget tracks money in and money out. Be careful when splitting sales into cash and credit. Watch %.


56,500 5,100


[1] 5,400 10,500 [1] [1] 10,000 [1] 10,000


Cash Budget for O’ Connor Ltd from January to June January February March April


[1] [1]


44,000 12,000 56,000


[1] [1]


43,500 3,000


[1] [1]


46,400 11,000 57,400


[1] [1]


42,000 3,000


[1] [1]


44,800 11,600 56,400


[1] [2] [1] [1]


45,000 3,000


24,000 [2] [1]


10,000 1,600


[1] 6,000 10,000 [1] 10,000 [1] 10,000 [3] 1,575


[1] [1]


48,000 11,200 59,200


[1] [1]


46,500 3,000


[1] [1]


May


49,600 12,000 61,600


[1] [1]


43,500 3,000


June 12,400 Total


[1] 46,400 279,200 [1]


70,200 58,800 349,400


[1] 46,500 267,000 [1]


3,000


18,000 24,000 6,000


60,000 1,600 1,575


[2]


61,075 378,175 (2,275) (28,775) 36,000 1,000 8,225


10,500 8,225


These amounts should be the same.


Leave June unfinished while you work out whether a loan is needed or not in the other months


16


261


Note


TIP


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