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    Exercises 3Ms

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    Bhodza
    Watson Limited provided budget information for sales, direct wages, direct materials, and other expenses for June through September. This included that 10% of sales are for cash, the rest are on 1 month credit. Materials and overhead expenses are on 1 month credit. Wages are paid as incurred. A delivery vehicle will be purchased in August for $9,870 cash. The cash balance at end of June is $1,235. The cashflow budget is to be prepared for July through September showing monthly receipts, payments, net cash flow, opening and closing balances.

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    Exercises 3Ms

    Uploaded by

    Bhodza
    344 views4 pages
    Watson Limited provided budget information for sales, direct wages, direct materials, and other expenses for June through September. This included that 10% of sales are for cash, the rest are on 1 month credit. Materials and overhead expenses are on 1 month credit. Wages are paid as incurred. A delivery vehicle will be purchased in August for $9,870 cash. The cash balance at end of June is $1,235. The cashflow budget is to be prepared for July through September showing monthly receipts, payments, net cash flow, opening and closing balances.

    Original Description:

    Cash flow Budgets exercise

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    Watson Limited provided budget information for sales, direct wages, direct materials, and other expenses for June through September. This included that 10% of sales are for cash, the rest are on 1 month credit. Materials and overhead expenses are on 1 month credit. Wages are paid as incurred. A delivery vehicle will be purchased in August for $9,870 cash. The cash balance at end of June is $1,235. The cashflow budget is to be prepared for July through September showing monthly receipts, payments, net cash flow, opening and closing balances.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    344 views4 pages

    Exercises 3Ms

    Uploaded by

    Bhodza
    Watson Limited provided budget information for sales, direct wages, direct materials, and other expenses for June through September. This included that 10% of sales are for cash, the rest are on 1 month credit. Materials and overhead expenses are on 1 month credit. Wages are paid as incurred. A delivery vehicle will be purchased in August for $9,870 cash. The cash balance at end of June is $1,235. The cashflow budget is to be prepared for July through September showing monthly receipts, payments, net cash flow, opening and closing balances.

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    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    of 4

    Exercise1: cashflow budget

    Watson limited is preparing its budgets for the next quarter. The following information has been drawn from the
    budgets prepared in the planning exercise so far
    sales value
    June (estimate)
    $12,500
    July (budget)
    $13,600
    August
    $17,000
    September
    $16,800
    Direct wages

    $1300 per month

    Direct materials

    June (estimate)
    July (budget)
    August
    September

    $3,450
    $3,780
    $2,890
    $3,150

    Other information

    Watson sells 10 per cent of its goods for cash. The remainder of customers receive
    one months credit.
    Payments to creditors are made in the month following purchase.
    Wages are paid as they are incurred.
    Watson takes one months credit on all overheads.
    Production overheads are $3,200 per month.
    Selling, distribution and administration overheads amount to $1,890 per month.
    Included in the amounts form the overhead given above are depreciation charges
    of $300 and $190 respectively.
    Watson expects to purchase a delivery vehicle in august for cash payment of
    $9,870
    The cash balance at the end of June is forecast to be $1,235
    You are required to prepare a cashflow budget for each of the months July to September

    Solution
    Watson Ltd cashflow budget for July to
    September
    July
    $
    Sales receipts:
    10% in cash
    90% in one month
    Total receipts
    Payments
    Material purchases (one month credit)
    direct wages
    Production overheads
    Selling, distribution and administration overhead
    Delivery vehicle
    Total payments
    Net cash inflow/outflow
    Opening cash balance
    Closing cash balance at the end of the month

    August
    $

    September
    $

    Exercise 2

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