Question

Question 2 125 marks no Be Selling Diamond (Pty) Ltd has a sales budg the remainder is sold on account The company expects that 60% of in the next month and the following mon es budget for March of R440,000. About 10% are cash sales and of credit sales will be collected in the month of the sale, 25% count are expected to be R250.000. Allan pays 35% in the month month following the purchase and the remaining 15% in the Materials purchased on account are of the purchase, 50% in the month second month after the purchase Salaries and wages of the workers are paid weekly so on average 95% of the the remaining 5% is paid in the following month. Utilities average R4,300 per month. orkers are approximately R45,000 per month. The employees are % of their wages are paid in the month to which they relate and Rent on the building is R9.000 per month Insurance is R3,000 per mon February sales were R320,000 and purchases of materia 00 per month and advertising costs are R1,000 per month. January sales were R200,000 and purc nd purchases of materials in February were R170 000 e R200,000 and purchases of materials in January were R130,000. The cash balance on March 1st is R5,400. A. Required: Prepare a schedule of cash receipts B. Prepare a schedule of cash payments (Accounts payable payments) Prepare a cash budget C. TURN OYFRI

Answer 1

cash receipts

	March
cash sales	44000	[440000*10%]
receipt from credit sale of january	18000	[200000*90%credit sales*10%]
receipt from credit sale of february	72000	[320000*90%*25%]
receipt from credit sale of March	237600	[440000*90%*60%]
Total cash receipts in march	371600$	[44000+18000+72000+237600]

2. payment budget

	March
payment from credit purchase of january	19500	[130000*15%]
payment from credit purchase of february	85000	[170000*50%]
payment from credit purchase of March	87500	[250000*35%]
Total cash payment in march	192000$

3. cash budget

	March
beginning cash balance	5400
Add: cash receipts from sales	371600
Total cash available	377000	371600+5400
Less: disbursements
cash payment for merchandise purchase	192000
salaries and wages	45000	95% of march and 5% of February paid in march
utilities	4300
rent on building	9000
insurance	3000
advertising cost	1000
Total disbursement	254300
ending cash balance	122700	[377000-254300]