Sales
($)
Materials
($)
Wages
($)
Production
($)
Admin. Selling,
etc
($)
Jun. 3,000 1,800 650 225 160
Jul. 3,250 2,000 750 225 160
Aug. 3,500 2,400 750 250 175
Sep. 3,750 2,250 750 300 175
Oct. 4,000 2,300 800 300 200
Nov. 4,250 2,500 900 350 200
Dec. 4,500 2,600 1,000 350 225
The credit terms are as
follows:
• Sales — 3 months to
debtors. 10% of sales are
in cash. On average, 50%
of credit sales are paid
on the due dates, while
the other 50% are paid in
the next month.
• Creditors for material — 2
months.
The lag in payment for
wages is 1/4 month and 1/2
month for overheads.
The cash and bank balance
on 1st October is expected to
be $1,500.
•
Other information is given as
follows:
• Plant and machinery are to
be installed in August at a
cost of $24,000. This sum
will be paid in monthly
installments of $500 each
from 1st October.
• Preference share
dividends @ 5% on
$50,000 are to be paid on
1st December.
• Calls on 250 equity shares
@ $2 per share are
expected on 1st
November.
• Dividends from
investments amounting to
$250 are expected on 31st
December.
• Income tax (advance) is to
be paid in December $500.