Struggling with Cash Management! Need a study buddy or an expert please!

jojobunny8510

Hi All

I'm struggling to complete CM and it's my last exam I already failed it twice! I have another exam booked in 2 weeks and was hoping someone could help me..

i had one question which from what i remembered i shall try and illustrate below..

Materials Month 5 Month 6 (£ per unit) Description
X £4000 £2000 22 30% following month, 40% 2 months and remaining ba balance following month
Y £4000 £2000 22 30% on delivery, 40% following month and remaining balance 2 months after that
Z £4000 £2000 22 Paid in full 1 month in arrears

On month 5 see table below opening balance

Material Month 5 Month 3 Month 4
X £45000 £15000 £30000
Y £50000 £25000 £25000
Z £30000 £15000 £15000

And see below the blank table which i had to fill in the answer from the above info:

Opening Month 5 Month 6 Month 7
Balance

X
Y
Z

Payment
Month 5

X
Y
Z

Payment
Month 6

X
Y
Z


The amounts aren't accurate but the above was the layout i i got on the exam and i run out of time as i never seen this type of layout before even on the 4 example papers on AAT website! Usually i will get a box which it will already fill some of it in :blushing:

Could someone please try and help?

Thanks!

ademoore

Sorry no one answered here, how was your exam?

angmc

I know this is an old thread but does anyone know how you deal with this type of question where you have to work out the opening balances as well as the payments?

SandyHood

jojobunny8510's info reinterpreted

jojobunny8510's info reinterpretedAttachment not found.

angmc

Thankyou. I'll be interested to see your interpretation. It's the bit about having to complete the opening balances table for months 5, 6, 7 that I haven't come accross before and then how that information gets transferred to the actual payments.

SandyHood

Looking at each material separately

Material X
Opening Balance Month 5 - we owe our suppliers £45,000
Made up of £15,000 for purchases in Month 3 and £30,000 for purchases in Month 4
I know jojobunny8510 couldn't remember the exact numbers, so don't worry too much about the unrounded number that follows
The Month 3 purchases must have been £21,429 and 30% (£6,429) was paid in Month 4 leaving the 40% due in Month 5 and the 30% due in Month 6

In Month 5 £17,571 has to be paid. This is made up of 40% of the Month 3 purchases 40% x £21,429 = £8.571 and 30% of the Month 4 purchases 30% x £30,000 = £9,000
And puchases add to trade creditors 4,000 x £22 = £88,000


................................................... The Material X Supplier Account
______________________________________________________________________________________________
.............................................................................|Opening Balance................................ £ 45,000
Bank ..................Purch..................................£17,571|Purchases (or Material X Inventory) ...... £88,000
Closing Balance .................................-..........£115,429|.....................................................________
................................................................ £133,000|......................................................£133,000

So in Month 6 £115,429 is the opening balance.
The payment in Month 6 will be (from Month 3) 30% of £21,439 £6,429 + (from Month 4) 40% of £30,000 £12,000 + (from Month 5) 30% of £88,000 £26,400 Total £44,829

................................................... The Material X Supplier Account
______________________________________________________________________________________________
.............................................................................|Opening Balance................................ £115,429
Bank ..................Purch..................................£44,829|Purchases (or Material X Inventory) ...... £44,000
Closing Balance .................................-..........£114,600|.....................................................________
................................................................ £159,429|......................................................£159,429

Do the T accounts help?
Can you see the process?

I'll do the same process with the other two materials and post them here tomorrow

angmc

Ahh ok yes I'm following so far. The T accounts do make it much easier!

Hell of a question though don't you think?