Question

OCTOBERNOVEMBER 2019 PORTFOL 125 m Question 2 Diamond (Pty) Ltd has a sales budget for March of R440.000, About 10% are cash sales an the remainder is sold on account. The company expects that 60% of credit sales will be collected in the month of the sale, 25% in the next month and 10% in the following month. Materials purchased on account are expected to be R250,000. Allan pays 35% in the month of the purchase, 50% in the month following the purchase and the remaining 15% in the second month after the purchase. Salaries and wages of the workers are approximately R45,000 per month. The employees are paid weekly so on average 95% of their wages are paid in the month to which they relate and the remaining 5% is paid in the following month. Utilities average R4,300 per month. Rent on the building is R9,000 per month. Insurance is R3,000 per month and advertising costs are R1,000 per month. February sales were R320,000 and purchases of materials in February were R170 000 January sales were R200,000 and purchases of materials in January were R130,000. The cash balance on March 1st is R5,400. Required A. Prepare a schedule of cash receipts Prepare a schedule of cash payments (Accounts payable payments) Prepare a cash budget estion 3 The Beetle Manufad

Answer 1

A.		Schedule of cash receipts-March
							R
	January sales		200000
	Credit sales at 90%		180000
	10% collected in the second month (March) following sale
	(180000*10%)						18000
	February sales		320000
	Credit sales at 90%		288000
	25% collected in the next month (March) of sale
	(288000*25%)						72000
	March sales		440000
	Cash sales at 10%						44000
	Credit sales at 90%		396000
	60% collected in the month of sale						237600
	Total						371600
B.	Schedule of cash payments (Accounts payable payments)-March
							R
	Jan purchase		130000
	15% in the second month after purchase				(130000*15%)		19500
	Feb purchase		170000
	50% in the month following purchase				(170000*50%)		85000
	Mar purchase		250000
	35% in the month of purchase				(250000*35%)		87500
	Total						192000
C.		Cash Budget-March
						R	R
	Beginning balance						5400
	Add: Cash receipts						371600
	Total cash available						377000
	Less:Cash disbursements
	Accounts payable payments					192000
	Salaries and wages:
	Current month			(45000*95%)		42750
	Previous month			(45000*5%)		2250
	Utilities					4300
	Rent					9000
	Insurance					3000
	Advertising cost					1000	254300
	Ending balance						122700
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