schedule of cash collections simple format
Broadbeach Ltd requires a cash budget for the month of October. The company’s financial officer has
provided the following information and assumptions:
i. The 1 October cash balance is expected to be $ 55,750.
ii. All sales are on account. Credit sales are collected over a three month period with 65% collected
in the month of sale, 30% in the month following sale, and 5% in the second month following sale.
iii. Actual sales for August and September were $ 85,500 and $ 78,100 respectively. October’s sales
are budgeted at $ 99,500.
iv. Marketable securities are expected to be sold for $ 54,000 during the month of October.
v. The financial officer estimates that direct materials totalling $ 75,300 will be purchased during
October. 50% of a month’s raw materials purchases are paid for in the month of purchase with the
remaining 50% paid for in the following month. Accounts payable for September purchases total $
22,900 which will be paid in October.
vi. October direct labour costs are expected to be $ 40,000.
vii. Manufacturing overhead is estimated to be 50% of direct labour costs, noting that approximately
10% of the manufacturing overhead is depreciation on factory buildings and equipment.
viii. Selling and administration expenses are budgeted at $ 48,000 for October. $22,000 of this amount
is for depreciation.
ix. During October, Broadbeach Ltd plans to purchase a new delivery van costing $45,000. The
company will pay cash for the van.
x. Broadbeach Ltd owes $ 12,000 in income tax and this will be paid in October.
xi. Broadbeach Ltd must maintain a minimum cash balance of $ 10,000 . To bolster the cash balance
as needed, an open line of credit is available from the bank at 8% per annum interest.
Required: Prepare the following for Broadbeach Ltd:
a) A schedule of cash collections. (5 marks)
b) A schedule of cash payments for raw materials. (5 marks)
c) A cash budget for the month of October. Indicate any borrowing that will be necessary during the
month. (10 marks)
