Thorne Estates Limited advertises and sells residential property on behalf of its
customers. The company has been in business for only a short time and is
preparing a cash budget for the first four months of 2021. Expected sales of
residential properties are as follows:
2020 2021 2021 2021 2021
Month Dec Jan Feb Mar Apr
Units Sold 10 10 15 25 30
The average price of each property is £180,000 and Thorne Estates charges a fee
of 3% of the value of each property sold. Thorne Estates receives a 1% in the
month of sale and the remaining 2% in the month after sale.
The company has nine employees who are paid on a monthly basis. The average
salary per employee is £35,000 per year. If more than 20 properties are sold in a
given month, each employee is paid in that month a bonus of £140 for each
additional property sold.
Variable expenses are incurred at the rate of 0.5% of the value of each property
sold and these expenses are paid in the month of sale. Fixed overheads of £4,300
per month are paid in the month in which they arise. Thorne Estates pays interest
every three months on a loan of £200,000 at a rate of 6% per year. The last
Interest payment in each year is paid in December. Rent of £42,000 will fall due at
the end of May.
An outstanding tax liability of £95,800 is due to be paid in April. In the same
month, Thorne Estates intends to dispose of surplus vehicles, with a net book
value of £15,000 for £20,000. The cash balance at the start of January 2021 is
expected to be a deficit of £40,000.
Required:
1. Prepare a monthly cash budget for the FOUR months from 1st Jan to 30 April
2021. calculations are easy send them within 30 mins
