Unit 15 - Tricky Question
Alec Baker
Registered Posts: 8 New contributor 🐸
Hi everyone,
Please could someone tell me the significance of the opening/closing stock figures mentioned in this question (see attached, under notes (1). I can’t see what role that information has for this question as we aren’t a manufacturing/production company and are given no production or manufacturing costs. My course material doesn’t seem to provide an example like this question.
Any thought or attempts gratefully received. I have attached my answer on a different tread named "Unit 15 - Tricky Question Alec's Attempt'
Regards Alec
Notes: The following are the pieces of information to accompany the attached question.
Notes:
4. Delivery costs are 1% of sales revenue each month and are paid in the month they are incurred.
5. Admin/miscellaneous expenses are also paid as they are incurred.
6. Packaging expenses are paid two months after they are incurred. These costs were £1000 in may and will be the same in june.
7. The bank changes interest of % per month for overdraft, calculated on the closing bank balanace each month and payable the following month.
8. The bank overdraft at 1st July 20x0 is expected to be £155,000.
9. The loan repayments above refer to an interest free loan obtained by the company when they moved their business to a new bank.
10. The business has no depreciable fixed assets.
Required:
Prepare a monthly cash budget for each of the six months to 31 December 20x0, showing the cash balance at then end of the month.
You are informed that:
. There were no sales of fixed assets in 20x0
. The company does not pay interim dividends
. New debentures and issued in 20x0 were issued on 1st January
Please could someone tell me the significance of the opening/closing stock figures mentioned in this question (see attached, under notes (1). I can’t see what role that information has for this question as we aren’t a manufacturing/production company and are given no production or manufacturing costs. My course material doesn’t seem to provide an example like this question.
Any thought or attempts gratefully received. I have attached my answer on a different tread named "Unit 15 - Tricky Question Alec's Attempt'
Regards Alec
Notes: The following are the pieces of information to accompany the attached question.
Notes:
4. Delivery costs are 1% of sales revenue each month and are paid in the month they are incurred.
5. Admin/miscellaneous expenses are also paid as they are incurred.
6. Packaging expenses are paid two months after they are incurred. These costs were £1000 in may and will be the same in june.
7. The bank changes interest of % per month for overdraft, calculated on the closing bank balanace each month and payable the following month.
8. The bank overdraft at 1st July 20x0 is expected to be £155,000.
9. The loan repayments above refer to an interest free loan obtained by the company when they moved their business to a new bank.
10. The business has no depreciable fixed assets.
Required:
Prepare a monthly cash budget for each of the six months to 31 December 20x0, showing the cash balance at then end of the month.
You are informed that:
. There were no sales of fixed assets in 20x0
. The company does not pay interim dividends
. New debentures and issued in 20x0 were issued on 1st January
0
Comments
-
Can I check 2 items?
- Is the opening overdraft £155,00, or £15,500?
- Is the overdraft interest 0.1% per month?
Sandy
sandy@sandyhood.com
www.sandyhood.com0 -
Hi Sandy.
Thanks for having a look at my forum post.
I can confirm that:
7. The bank charges interest of 1% per month for the overdraft, calculated on the closing bank balance each month and payable the following month.
8. The bank overdraft at 1 July 20X0 is expected to be £155,000.
Regards
Alec0 -
Tricky question
The significance of opening closing stock level could be to work out the units produced or material used as I dont know the whole question cant answer specifically.
Hope it will help0 -
Hi Currywala,
Please see attachement (PDF) for first part of the question and the second part is written in the first post.
regards0
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