solution

Al Ayat perfumes Company is in the business of buying and selling of different types of perfumes products in different region of Oman and provided the following data to understand the cash position every month start from January to July 2020. The sales book reported the sales amount for seven months as below: –

January

February

March

April

May

June

July

36,000

39,000

39,000

38,800

26,600

29,800

41,400

The sales reported every month including cash sales and credit sales. Cash sales constitute 25% of total sales collected in the month of sales and the balance is credit sales received in the month following the month of actual sales.

The detail of goods purchased in cash during seven months reported in purchase book as below: –

January

February

March

April

May

June

July

1,000

3,500

3,600

4,200

4,800

7,400

3,800

Company also purchased goods on credit from different suppliers. The detail of credit purchase from the month January to July is given below: –

January

February

March

April

May

June

July

11,000

14,000

14,200

16,400

13,800

10,800

14,600

Cash purchases payable in the month of purchases and credit purchases are payable to supplier in two months following the month of credit purchase.

It is also found from the accounting records that the company purchased plant and equipment for RO 25,000 in the month of February and it is payable in three equal instalments starting from April. Tax department has sent a notice to the company to pay taxes of RO 5,000 each in the month of June and July.

The wages and office expenses are paid in the month following the month in which wages and office expenses incurred. The detail of wages and office expenses is given below: –

January

February

March

April

May

June

July

Wages

4,000

3,250

3,750

4,780

3,900

3,600

3,800

Office Expenses

1,500

1,300

1,200

1,400

1,300

700

2,000

The selling expenses of the company recorded for the seven months are as follows: –

January

February

March

April

May

June

July

560

870

750

740

550

650

630

The company also incurred administrative expenses for the period January to July. The detail of administrative expenses is given as below: –

January

February

March

April

May

June

July

940

750

890

1,500

1,400

1,400

1,500

The company is paying the selling and administration expenses in one months following the month in which such expenses incurred.

The cash balance as on 1st January is RO 20,250.

Requirement: The Company has requested you to prepare Cash budget for the period of six months (January to June). [5 Marks]

please i want with the details

 
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