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Learning outcome: After attempting this activity, students will be able to understand the nature of transactions relevant to a cash budget and will be able to prepare it.

 

Background:

Blues Enterprise has hired two interns in its accounts department. Different tasks have been assigned to both, among which, one is to prepare the cash budget of the company for the first quarter (January-March). In this regard following information has been provided to both:

 

Provided Information:

Debtors pay to the company after two months from the date of sale while the company makes payment to creditors after three months from the date of purchase. A loan worth Rs. 2 million has been approved by a bank for the company in March against which amount is expected to receive at the start of the second quarter.  An interest payment for the month of December is paid by the company in January. The company also sold some of its old equipment in December last year on one-month credit basis while bought new equipment in the same month on cash basis.

 

Activity:

Both interns have prepared cash budget by utilizing the above available information. Accounting chief of the company thereafter analyzed the prepared cash budget of each intern and highlighted the following treatments of different transactions done by each:

 

Observations identified in cash budget prepared by Intern 1:

Cash received from the sales of January is treated as cash inflow in the month of April. Some of the material purchased by the company in December is treated as cash outflow in March. The loan approved by the bank is completely ignored in the cash budget. Interest on loan for the month of December is treated as cash outflow in January. Transactions related to the equipment’s buying and selling have also been ignored in the cash budget.

 

Observations identified in cash budget prepared by Intern 2:

Sales made by the company in the month of December are treated as cash inflow for the month of February. Material purchased by the company in January is treated as cash outflow for the month of March. The loan worth Rs. 2 million approved by the bank is considered as cash inflow for the month of April. Interest payment of December and the buying of new equipment have been considered as cash outflow for the month of December last year. However, cash received from the sale of equipment has been treated as cash inflow for the month of January.

 

Requirements:

a.      Analyze each of the above provided observations of cash budget and identify the wrong treatment(s) in each (if there is any).

b.      If you find any wrong treatment (mentioned by you in part a) then you will also have to justify that why are you considering it wrong by providing appropriate reasoning.

(Note: Any identification of wrong treatment will not be considered for grading if appropriate justification is missing for it).   

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kisi ka pass ha solution GDB kia

aoa kisi ka pas GDB ka solution hai kya 

Traiq sb Finance 722 ka solution chaya that 

idea sol plzzz

please send solution of GDB

usman bhi ap na work bi kya hi GBD par ka nai abi tak 

ANY help to solve

FIN 722 ASSIGNMENT 1 DUE DATED 26 JULY 2018

CASH BUDGET ???

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