Assignment: Management Accounting
Beckett Stores is a retailer of children's toys in the south of England. You are the Cash Controller of the stores and presented with the following projections for the six months to 31 August 2018.
Sales and Purchases for the six months to 31 August 2018 will be as follows:
|
|
March
|
April
|
May
|
June
|
July
|
August
|
|
Sales(£)
|
150,000
|
155,000
|
165,000
|
120,000
|
170,000
|
175,000
|
|
Purchases(£)
|
80,000
|
60,000
|
70,000
|
55,000
|
90,000
|
95,000
|
Additional details are as follows:
1. All sales are on a cash basis.
2. All purchases are on a two months credit.
3. Salaries are £30,000 per month for each of the first three months. This will Increase by 8% from month four. Salaries are paid in the same month of accrual.
4. Administration expenses payable in the same month and are expected to be £6,000 for each of the first three months and £7,000 for subsequent months. These figures include a monthly charge of £2,000 in respect of depreciation of fixed assets.
5. Selling expenses are expected to be £2,000 per month except for 30th June 2018, when an advertising campaign costing £2,000 will be paid. Selling expenses are paid in the month they are incurred.
6. A bank loan is to be received in 2018 for an amount of £12,000 in the month of March, 2018 and will be repaid in the month of June together with an interest of £100.
7. The business will purchase a new machine costing £2,000 in May 2018 on a two months credit term.
8. The opening cash balance is £20,000.
You are required to:
a) Prepare a monthly cash budget for the six months ending 31st August 2018.
b) Prepare a statement of Working Capital as at 31st August 2018.
c) Explain the importance of preparing a cash budget to the management of Beckett Stores.
Format your assignment according to the following formatting requirements:
1. The answer should be typed, double spaced, using Times New Roman font (size 12), with one-inch margins on all sides.
2. The response also include a cover page containing the title of the assignment, the student's name, the course title, and the date. The cover page is not included in the required page length.
3. Also Include a reference page. The Citations and references should follow APA format. The reference page is not included in the required page length.