the following data has been estimated for macquarie machinery who commenced business 4375431

The following data has been estimated for Macquarie Machinery, who commenced business on 1 August 2013. • Estimated total sales: August ……………………………. $55 000 September ………………………… $50 000 Cash sales are estimated to be 20% of total sales. • Debtors are expected to pay: 50% in the month of sale 48% in the month after the sale with the balance owing never collected. • Estimated purchases: August ………………………….. $30 000 September ………………………. $36 000 • All purchases are to be on credit and are to be paid for in the month following the purchase. • Estimated operating expenses are: – Freight outwards 15% of total sales, paid in cash. – Office salaries, August $9000, Sept. $11 600, paid in cash. – Depreciation of equipment 25% per annum on $250 000. (The equipment was purchased on credit.) • Other information: – The owner contributed $85 000 cash to the business on August 1, 2013. – The owner intends withdrawing $3000 per month for private use. – The accountant of Macquarie Machinery estimates the firm will need a minimum cash balance of $15 000 in order to maintain liquidity. Required: a) Prepare a schedule of expected receipts from debtors for August and September 2013. b) Prepare a cash budget for the two months ended 30 September 2013 showing the expected cash balance at the end of each month. (It is not necessary to show a total column for the two months). c) On 30 September 2013 an installment of $100 000 will be due on the new machinery. Will Macquarie Machinery be able to pay the installment? Explain. View Solution:
The following data has been estimated for Macquarie Machinery who

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