Q3a: Based on Figure 3 information produce a cash flow forecast for Amna's business. Q3b: Identify those months where there may be a financial issue. For each month, analyse the issue and make recommendation(s) to solve these. Figure 3 Complete a cash flow forecast for January to June from the following information for Amna's business: • A business starts with £13,000 in the bank. • It will take out a loan of £11,000 in March. • It will pay back the loan at £900 per month beginning in April. • It will sublet its premises and receive £7,000 in January and in April. • In March it will sell a van for £5000 and buy a new one costing £10,000. • Its overheads will be £9,000 from January to March and then increase to £12,000 per month. • It will pay £6,000 per month in wages. • In April it will pay a tax bill of £9,000. Its sales and purchases are as follows: Jan Feb March April May June £ £ £ £ £ £ Sales 5000 6700 6000 6400 7000 7000 Purchases 5000 2300 3200 2400 5500 4400

Q3a: Based on Figure 3 information produce a cash flow forecast for Amna's business. Q3b: Identify those months where there may be a financial issue. For each month, analyse the issue and make recommendation(s) to solve these. Figure 3 Complete a cash flow forecast for January to June from the following information for Amna's business: • A business starts with £13,000 in the bank. • It will take out a loan of £11,000 in March. • It will pay back the loan at £900 per month beginning in April. • It will sublet its premises and receive £7,000 in January and in April. • In March it will sell a van for £5000 and buy a new one costing £10,000. • Its overheads will be £9,000 from January to March and then increase to £12,000 per month. • It will pay £6,000 per month in wages. • In April it will pay a tax bill of £9,000. Its sales and purchases are as follows: Jan Feb March April May June £ £ £ £ £ £ Sales 5000 6700 6000 6400 7000 7000 Purchases 5000 2300 3200 2400 5500 4400

Excel Applications for Accounting Principles

4th Edition

ISBN:9781111581565

Author:Gaylord N. Smith

Publisher:Gaylord N. Smith

Chapter21: Cash Budgeting (cashbud)

Section: Chapter Questions

Problem 5R: The following four suggestions have been made to improve the company’s cash position. Evaluate the...

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The financial manager of a firm wants to determine the amount of cash outlays to be spent for the next period. He asked the help of the accountant and the latter provided a cash budget for the next year. According to the computations, the company would be incurring cash expenses of P6,612,500 per month. The financial manager has estimated a cost of P40 per transaction in case non-cash asset is converted to cash. The firm’s opportunity cost ratio is 12%. The optimum cash balance is? The average cash balance is? the number of conversion made during the year is? The total cash cost is?
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