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

Essay

Bluebird Ltd has provided the estimates below for the July-September quarter in 2017. $$\begin{array} { l r r r } & \text { July } & \text { August } & \text { September } \\& \$ & \$ & \$ \\\text { Sales } & 13,000 & 14,000 & 15,000 \\\text { Purchases } & 9,400 & 8,000 & 10,000 \\\text { Operating expenses } & 3,600 & 6,400 & 5,000\end{array}$$ You are also given the following additional information:
• 35% of sales are cash sales, the remaining 65% credit sales are collected as follows:
o 30% in the month of sale
o 40% in the month after sale
o 28% 2 months after sale
o 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.