CHAPTER 9 Budgeting 405SOLUTION TO 9.1
Credit sales are normally settled according to the following pattern: 40 per cent in the month of
sale, 30 per cent in the month following the sale, and 25 per cent in the second month following the
sale. Five per cent of accounts are never collected.April May June
February
March
April
May
June$134 000
126 000
108 000
110 000
128 000$33 500
37 800
43 200$31 500
32 400
44 000$27 000
33 000
51 200
Totals $114 500 $107 900 $111 2009.2 Nicholas Cash at Advantage Tennis Coaching has provided the following estimates for the month of
January 2017.
Junior Squad fees — cash
Elite and adult squad fees — credit
Receipts from accounts receivable
Tournament sponsorship received
Wages incurred (90% paid)
Court lease (paid)
Promotional expenses (50% paid)
Depreciation on equipment
Utility account owing
Payments to accounts payable for supplies
Loan repayment — principal
Interest charge (not paid)
Insurance premium paid in advance for year$42 000
14 500
10 000
5 000
20 000
6 700
13 000
1 300
1 200
600
3 900
250
20 000SOLUTION TO 9.2The cash balance at 31 December 2016 was $8600. Prepare a cash budget for the month of January
Advantage Tennis Coaching
Cash budget for January 2017
Cash receipts
Squad fees received in cash
Receipts from accounts receivable
Tournament sponsorship received$42 000
10 000
5 000 $57 000
Cash payments
Wages
Court lease
Promotional expenses paid
Payments to accounts payable
Loan repayment
Insurance premium18 000
6 700
6 500
600
3 900
20 000 55 700
Excess of receipts over payments
Bank balance at 31 December 20161 300
8 600
Bank balance at end of January 2017 $9 900Comprehension questions
9.3 Differentiate between strategic planning and operational budgeting. LO2
9.4 Discuss the benefits to an entity in preparing a budget for the coming financial year. LO2