Question

Kyriakides Ltd owns furniture stores in the high streets of large towns. You work
in the finance department of Kyriakides Ltd and have been asked to help with the
preparation of budgets for the six-month period January 2020 to June 2020.
Due to the growth of the internet, revenue for Kyriakides Ltd is declining. Revenue
for December 2019 was £480 000 for all stores. This is expected to fall at a constant
monthly rate to £432 000 in June 2020.
Required
(a) Prepare a revenue budget for each month for the period January 2020 to
June 2020.
(3)
In 2019 all sales were for cash. Starting in January 2020, Kyriakides Ltd is considering
selling to customers on credit. It is expected that this will result in revenue increasing
in January 2020 by 5% on the December 2019 figure. Revenue will continue to rise
by 5% each month, on the previous month’s figure until April 2020. The revenue for
each of May 2020 and June 2020 will be the same as the revenue for April 2020.
Required
(b) Prepare a revised revenue budget for each month for the period January 2020 to
June 2020.
(4)
It is expected that 50% of sales will be on credit. Credit customers will pay nothing in
the month of the sale. They will then have to make two equal payments in the two
months following the sale.
(c) Prepare a trade receivables budget, showing trade receivables at the end of
each month, for the period January 2020 to June 2020.
(13)
(d) Explain any two stages in the process of budget preparation.
(4)
(e) Evaluate the possible change being considered by Kyriakides Ltd to allow
customers to buy on credit.

Answer 1

Answer:

hey how's egz-nifd-uxr