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The following details have been extracted from the receivables collection records of C Co.
Invoices paid in the month after sale 60%
Invoices paid in the second month after sale 25%
Invoices paid in the third month after sale 12%
Bad debts 3%
Question no 2
BDL plc is currently preparing its cash budget for the year to 31 March 20X8. An extract from its
sales budget for the same year shows the following sales values.
$
March 60,000
April 70,000
May 55,000
June 65,000
40% of its sales are expected to be for cash. Of its credit sales, 70% are expected to pay in the
month after sale and take a 2% discount; 27% are expected to pay in the second month after the
sale, and the remaining 3% are expected to be bad debts.
The value of sales receipts to be shown in the cash budget for May 20X7 is
A. $60,532
B. $61,120
C. $66,532
D. $86,620
Question no 3
Raw material opening inventories are budgeted as follows.
April May June
3,800 kg 4,200 kg 4,100 kg
Question no 4
Wages are paid 75% in the month of production and 25% in the following month. The figure to be
included in the cash budget for May in respect of wages is:
A. $222,600
B. $231,000
C. $233,800
D. $235,200
Question no 5
An extract from T Co's sales budget shows the following sales values.
$
June 80,000
July 70,000
August 90,000
50% of T's sales are for cash. Of the credit sales, 60% are expected to pay in the month after sale
and take a 2% discount; 39% are expected to pay in the second month after sale, and the remaining
1% are expected to be bad debts.
The value of sales receipts from credit customers to be shown in the cash budget for August is
$________________ (to the nearest $)
Question no 6
The following details have been extracted from the receivables collection records of X Co:
Invoices paid in the month after sale 60%
Invoices paid in the second month after sale 20%
Invoices paid in the third month after sale 15%
Bad debts 5%
Credit sales for June to August are budgeted as follows:
June $100,000
July $150,000
August $130,000
Customers paying in the month after sale are entitled to deduct a 2% settlement discount. Invoices
are issued on the last day of the month.
The amount budgeted to be received in September from credit sales is $ ______________(to the
nearest $)
Question no 7
An extract from a company's sales budget is as follows:
$
October 224,000
November 390,000
December 402,000
Ten per cent of sales are paid for immediately in cash. Of the credit customers, 30 per cent pay in
the month following the sale and are entitled to a one per cent discount. The remaining customers
pay two months after the sale is made.
The value of sales receipts shown in the company's cash budget for December is:
A. $285,567
B. $286,620
C. $290,430
D. $312,830
Question no 8
Vincent is preparing a cash budget for July. His credit sales are as follows;
$
April (actual) 40,000
May (actual) 30,000
June (actual) 20,000
July (estimated) 25,000
His recent debt collection experience has been as follows;
Current month’s sales 20%
Prior month’s sales 60%
Sales two months prior 10%
Cash discounts taken 5%
Irrecoverable debts 5%
How much many Vincent expect to collect from credit customers during July?
A. $18,000
B. $20,000
C. $21,000
D. $24,000
Question no 9
DRF’s projected revenue for 20X9 is $28,000 per month. All sales are on credit. Receivables’
accounts are settled 50% in the month of sale, 45% in the following month, and 5% are written off
as irrecoverable debts after two months.
1 January 31 January
Product z (units) 14,000 12,000
Raw material w (litres) 20,000 15,000
1 litre of w cost $4
If the company pays for all purchases in the month of acquisition, what is the cash outlay for
January purchases of w?
A. $84,000
B. $80,000
C. $44,000
D. $12,000
Question no 11
A company has a two-month receivables cycle. It receives in cash 45% of the total gross sales value
in the month invoicing. Irrecoverable debts are 20% of total gross sales value & there is a 10%
discount for settling accounts within 30 days.
What proportion of the first month’s sales will be received as cash in the second month?
A. 25%
B. 30%
C. 35%
D. 55%
Question no 12
Spear makes gross sales for $40,000 per month, of which 10% are for cash, the rest on credit.
Experience shows the following;
Receivables paying
Within one months 40%
Within two months 50%
Settlement discounts (for payment within one month) 4%
Total expected cash receipts in any month will be;
A. $35,824
B. $36,400
C. $38,560
D. $40,000
Question no 13
Jasper has budgeted the following month.
$000
Accounting profit after tax 100
Increase in receivables 35
Increase in inventory 20
Increase in trade payables 20
Depreciation 70
Increase in provisions
Taxation 40