Question Tag: and July based on provided sales

The following information relates to Impact Limited; a retailing outfit located in the Eastern region of Ghana. Month Sales (GHs’m) Wages incurred (GHs’m) Materials purchased (GHs’m) Overheads (GHs’m) January 70 12 40 25 February 90 14 45 20 March 120 20 50 32 April 100 18 70 28 May 140 24 60 36 June 120 20 50 32 July 100 18 50 28 August 100 18 60 28

The following additional information has been provided: a. It is expected that the cash balance on April 30, will be GH¢50m. b. Wages may be assumed to be paid within the month in which they are incurred. c. It is company’s policy to pay creditors for materials three months after receipts of the materials. d. Debtors are expected to pay two months after delivery to them. e. Included in the overhead figures is GH¢4m per month which represents depreciation on two cars and one delivery van. f. There is a delay in paying the overheads expenses by one month. g. 10% of the monthly sales are for cash and 90% are on credit. h. A commission of 5% is paid to agents on all sales on credit but this is not paid until the month following the sales to which it relates; this expense is not included in the overhead figures shown. i. It is intended to repay a loan of GH¢50m on June 30. j. Delivery is expected in May of a new machine costing GH¢85m of which GH¢25m will be paid on delivery and GH¢30m in each of the immediately following successive two months. k. Assume that overdraft facilities are available if required.

You are required to: Prepare a Cash budget for each of the three months of May, June and July.