Bluebird Ltd Has Provided the Estimates Below for the July-September

question 78

Essay

Bluebird Ltd has provided the estimates below for the July-September quarter in 2017. $\begin{array}{llll} & \text { July } & \text { August } & \text { September } \\& \$ & \$ & \$ \\\text { Sales } & 13,000 & 14,000 & 15,000 \\\text { Purchases } & 9,400 & 8,000 & 10,000 \\\text { Operating expenses } & 3,600 & 6,400 & 5,000\end{array}$ You are also given the following additional information:
• 35% of sales are cash sales, the remaining 65% credit sales are collected as follows:
- $30 \%$ in the month of sale
- $40 \%$ in the month after sale
- $28 \% 2$ months after sale
- $2 \%$ lost in bad debts • Sales in the months of May and June were $11 000 and $10 000 respectively.
• Operating expenses include depreciation each month of $900. All expenses and purchases are paid for in the same month they are incurred.
• The firm 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 2017 is $5 700.
REQUIRED:
A)Prepare a schedule of receipts from accounts receivable showing the collections in the three months July to September.
B)Prepare a cash budget for Bluebird Ltd for the three months July to September.
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• A)Prepare a schedule of receipts from accounts receivable showing the collections in the three months July to September.
• B)Prepare a cash budget for Bluebird Ltd for the three months July to September.
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Definitions:

Horizontal Market

A market that meets a specific need across multiple industries, rather than being confined to a particular sector.

Natural Monopoly

A type of monopoly that arises due to high fixed or start-up costs associated with the business, making it efficient for only one provider to serve the entire market.

Antitrust Law

Laws designed to promote competition and prevent monopolies by regulating corporate practices that restrict trade.

Product Price

The amount of money charged for a product, determined by costs, market demand, and competition.