Question 4 £'000 The CEO of Barney the Dino Limited wishes to prepare a cash flow budget to estimate the company's cash

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Question 4 000 The Ceo Of Barney The Dino Limited Wishes To Prepare A Cash Flow Budget To Estimate The Company S Cash 1 (127.85 KiB) Viewed 43 times

Question 4 000 The Ceo Of Barney The Dino Limited Wishes To Prepare A Cash Flow Budget To Estimate The Company S Cash 2 (20.51 KiB) Viewed 43 times

Question 4 £'000 The CEO of Barney the Dino Limited wishes to prepare a cash flow budget to estimate the company's cash surplus or deficit. Barney's Statement of Financial position is as follows. Statement of Financial Position of Acme Acres Ltd as at 31 January 20X7 £'000 Non-current assets at cost Premises 1560 Less: accumulated depreciation on Premises 300 Furniture 600 Less: accumulated depreciation on Furniture 150 1260 450 1710 Current assets Cash Receivables Closing Inventory Prepaid expenses TOTAL ASSETS 0 45 90 40 175 1885 Current liabilities: Payables Short term loan Outstanding Expenses Bank overdraft 50 45 60 100 255 Non-current liabilities Debentures 245 245 Equity Ordinary share capital Share Premium TOTAL EQUITY & LIABILITIES 400 100 500 1885 Continued on next page 7 Additional Notes The directors of the company have prepared the following estimates for the next 6 months: (a) Sales and purchases are expected to be as follows: Sales £'000 Purchases £'000 February 35 20 March 32 22 April 45 30 May 39 25 June 55 40 July 65 50 (b) All sales are on credit. 50% of debtors pay one month after the month of sale. 30% of debtors pay two months after the month of sale. 20% of the debtors pay three months after the sale. Sales in January 20X7 were £18000. Sales in December 20X6 were £19000. (c) All purchases are on one month's trade credit. (d) The Short-term loan is due for payment in March 20x7. (e) The Outstanding expenses are due for payment in April 20x7. (f) Administration and finance expenses (including depreciation of Premises) are expected to be £32000 per month in February and £36000 per month in subsequent months. (g) Selling and distribution expenses (including depreciation of Furniture) are expected to be £40000 per month in February and £43000 per month in subsequent months. (h) Depreciation of Premises is at the rate of 10% of cost per annum. (i) Depreciation of Furniture is at the rate of 15% of cost per annum. Required: - a) Prepare a cash budget for Roger Limited for the six months ended 31 July 20x7 which shows the cash balance at the end of each month. (10 Marks) b) Critically discuss the cash flow problems will the company face over the next six months and how might the company deal with them? (10 Marks) TOTAL MARKS = 20
Question 4 E'000 The CEO of Barney the Dino Limited wishes to prepare a cash flow budget to estimate the company's cash surplus or deficit Barney's Statement of Financial position is as follows Statement of Financial Position of Acme Acres Ltd as at 31 January 20X7 E'000 Non-current assets at cost Premises 1560 Less: accumulated depreciation on Premises 300 Furniture 600 Less accumulated depreciation on Furniture 150 1260 450 1710 Current assets Cash Receivables Closing Inventory Prepaid expenses TOTAL ASSETS 0 45 90 40 175 1885 Current liabilities: Payables Short term loan Outstanding Expenses Bank overdraft 50 45 60 100 255 Non-current liabilities Debentures 245 245 Equity Ordinary share capital Share Premium TOTAL EQUITY & LIABILITIES 400 100 500 1885 Continued on next page