Question  
No link plz
 

 

The management accountant at Miller Merchandising & More, Odail Russell is in the process of preparing the cash budget for the businessto borrow money during this quarter. Extracts from the sales and purchases budgets are
as follows:
Month       cash sales       sales on account        purchases
August          $85,000              $640,000                 $420,000
September    $70,000              $550,000                $550,000
October          $88,550             $600,000                $500,000
November      $77,160             $800,000                $600,000
December      $174,870           $500,000                $450,000
i) An analysis of the records shows that trade receivables are settled according to the following credit pattern, in accordance with the credit terms 4/30, n90:
50% in the month of sale
30% in the first month following the sale
20% in the second month following the sale
ii) Expected purchases include monthly cash purchases of 5%. All other purchases are on account. Accounts payable are settled as follows, in accordance with the credit terms –
2/30, n60
60% in the month in which the inventory is purchased
40% in the following month
iii) Fixed operating expenses which accrue evenly throughout the year, are estimated to be $1,680,000 per annum, (including depreciation on non-current assets of $420,000 per
annum) and is settled monthly.
iv) Wages and salaries are expected to be $2,280,000 per annum and will be paid monthly.
v) Other operating expenses are expected to be $108,000 per quarter and will be settled
monthly.
vi) In the month of November, an old motor vehicle, which cost $650,000, will be sold to an employee at a gain of $30,000. Accumulated depreciation on the motor vehicle at that time
is expected to be $540,000. The employee will be allowed to pay a deposit equal to 60% of the selling price in November and the balance settled in two equal amounts in December
2021 & January of 2022.
vii) Computer equipment, which is estimated to cost $320,000, will be acquired in November. The manager has made arrangements with the dealer to make a cash deposit of 50% of the amount upon signing of the agreement in November, with the balance to be settled in four equal monthly instalments, starting in December 2021
viii) The management of Miller Merchandising Company has negotiated with a tenant to rent office space to her beginning November 1. The rental is $624,000 per annum. The first
month’s rent along with one month’s safety deposit is expected to be collected on November 1. Thereafter, monthly rental income becomes due at the beginning of each
month.
Co
Required:
(a) The business needs to have a sense of its future cashflows and therefore requires the
preparation of the following:

1. A schedule of budgeted cash collections for trade receivables (sales on account) for each of the months October to December. 
2. A schedule of expected cash disbursements for accounts payable (purchases on account)for each of the months October to December.
 
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