Scramble Supermarket is a cash-sale store in Paarl. The managers expect the next three months (from January to March) to demand cash requirements beyond the normal operational outflows.

A monthly cash budget to identify possible cash needs up to the end of March must therefore be developed from the information and projections that have been made available.

A cash balance of R28 700 is currently on hand and a balance of at least R20 000 must be available at the beginning of each month.

1. Sales forecasts are:

January R180 000, February R240 000, March R210 000, April R240 000.

The store has recently introduced a loyalty card system and 40% of cash from sales each month is only received by the middle of the next month.

2. Cost of goods sold averages 75% of sales.

– Inventory purchased during each month averages the cost of sales for the next month.

– Inventory on hand on 1 December amounted to R270 000.

– Accounts payable payment period averages 15 days, and goods are purchased consistently over the month.

3. Operating expenses are projected as:

a. Salaries and wages at 12% of sales, paid in the month of sale.

b. Other expenses at an average 10% of sales, paid in the month of sale.

c. Cash receipts expected from repayment of a loan to an employee of R6 000 due in March.

d. Repayments of short-term loan of R3 000 are due in February.

e. Repayments of long-term loans due at R4 000 each in January and March.

f. A new refrigerator was purchased for R48 000 and four payments of R12 000 each are due in February, March, April and May.

g. Depreciation of all equipment is written off at the rate of R5 000 per month.

h. Interest income from an investment of R4 900 per month is expected.

i. A bonus of R52 500 is due to staff in January.

j. Company tax payment of R14 000 is due in March.