Question 2 (Approximate completion time: 50 mins) CLO 4 (Total 35 Marks) At the beginning of April 2020, Broderick & Co.
Posted: Wed Apr 27, 2022 11:28 am
Question 2 (Approximate
completion time: 50 mins) CLO 4 (Total 35
Marks)
At the beginning of April 2020, Broderick & Co. Ltd had a
closing cash balance of $500,000 at the bank. The company’s
financial year ends on December 31st each year. Cash
budgeting is critical to the company’s financial information needs.
The following information was extracted from the company’s
records:
1.
Budgeted
Sales
2020
$
February
700,000
March
800,000
April
900,000
May
650,000
June
750,000
July
600,000
August
850,000
September
600,000
The company’s records indicated that 60% of the company’s sales
were for cash; and 40% was received the month after sale.
(2) Taxation for the first quarter of 2020
amounting to $280,000 was due in the first month of the second
quarter.
(3) In February 2020 the company bought a motor
truck for $3,000,000. The agreement with the supplier was that a
down-payment of $2,000,000 would be made in the last month of the
first quarter in 2020 and the balance paid off in equal amounts
during the first two months of the second quarter in 2020.
(4) The company is to receive insurance claim
of $1,500,000 for damage done to its warehouse during heavy rains.
The amount is to be disbursed as follows: $600,000 in May 2020;
$400,000 in June 2020; and the balance in July 2020.
(5) Investments held at Bank of Kingston will
mature in June 2020. The amount to be collected is expected to be
$1,000,000. The company planned to pay dividends to its
shareholders amounting to $200,000 in May 2020. It also, planned to
pay $450,000 in April 2020 for a plot of land to build a new
warehouse.
(6) In May 2020 the company sold a motor
vehicle for $300,000 to one of its staff members while $200,000
written off as bad debt in $2019 was recovered in the first month
of the second quarter in 2020. Rental income amounting to $600,000
per annum is budgeted for 2020.
(7) Operating expenses amounted to $3,600,000
is budgeted for 2020. Included in this figure is monthly
depreciation of $50,000.
(8). Miscellaneous expenses amounting to
$60,000 monthly was not included in the operating expenses
budget.
(9) All purchases are made for cash. The
following table provides information on budgeted
purchases:
Budgeted Purchases
2020
$
February
500,000
March
350,000
April
290,000
May
250,000
June
270,000
July
380,000
August
450,000
September
440,000
Required:
completion time: 50 mins) CLO 4 (Total 35
Marks)
At the beginning of April 2020, Broderick & Co. Ltd had a
closing cash balance of $500,000 at the bank. The company’s
financial year ends on December 31st each year. Cash
budgeting is critical to the company’s financial information needs.
The following information was extracted from the company’s
records:
1.
Budgeted
Sales
2020
$
February
700,000
March
800,000
April
900,000
May
650,000
June
750,000
July
600,000
August
850,000
September
600,000
The company’s records indicated that 60% of the company’s sales
were for cash; and 40% was received the month after sale.
(2) Taxation for the first quarter of 2020
amounting to $280,000 was due in the first month of the second
quarter.
(3) In February 2020 the company bought a motor
truck for $3,000,000. The agreement with the supplier was that a
down-payment of $2,000,000 would be made in the last month of the
first quarter in 2020 and the balance paid off in equal amounts
during the first two months of the second quarter in 2020.
(4) The company is to receive insurance claim
of $1,500,000 for damage done to its warehouse during heavy rains.
The amount is to be disbursed as follows: $600,000 in May 2020;
$400,000 in June 2020; and the balance in July 2020.
(5) Investments held at Bank of Kingston will
mature in June 2020. The amount to be collected is expected to be
$1,000,000. The company planned to pay dividends to its
shareholders amounting to $200,000 in May 2020. It also, planned to
pay $450,000 in April 2020 for a plot of land to build a new
warehouse.
(6) In May 2020 the company sold a motor
vehicle for $300,000 to one of its staff members while $200,000
written off as bad debt in $2019 was recovered in the first month
of the second quarter in 2020. Rental income amounting to $600,000
per annum is budgeted for 2020.
(7) Operating expenses amounted to $3,600,000
is budgeted for 2020. Included in this figure is monthly
depreciation of $50,000.
(8). Miscellaneous expenses amounting to
$60,000 monthly was not included in the operating expenses
budget.
(9) All purchases are made for cash. The
following table provides information on budgeted
purchases:
Budgeted Purchases
2020
$
February
500,000
March
350,000
April
290,000
May
250,000
June
270,000
July
380,000
August
450,000
September
440,000
Required: