Bluebird Ltd has provided the following forecasted items for the months of July through to September 2020.
| July | August | September | |
| $ | $ | $ | |
| Sales | 13,000 | 14,000 | 15,000 |
| Purchases | 9,400 | 8,000 | 10,000 |
| Operating expenses | 3,600 | 6,400 | 5,000 |
Other Information:
- 35% of Sales are cash sales, the remaining 65% of credit sales which are collected as follows:
- 30% in the month of the sale
- 50% in the month after the sale
- 28% in the 2nd month after the sale
- 2% are never collected due to the customer going bankrupt
- Sales in the months of May and June were $11,000 and $10,000 respectively.
- Operating expenses include depreciation expense. Depreciation expense each month is $900. All expenses and purchases are paid for in the same month that they are incurred.
- Bluebird expects to sell some old machinery for $7,000 in August. New machinery worth $9,500 will be purchased in September.
- The cash balance on 1st July 2020 is $5,700.
Required:
- Prepare a schedule of the Cash receipts from Accounts receivable showing the collections for the three months of July through to September.
- Prepare a Cash budget for Bluebird Ltd for the three months of July through to September 2020.
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