$3\mathrm{.}2$

Cash Budget

$(16$ marks$)$

INFORMATION

Glenville Limited is in the process of developing a cash budget for July and August $2024.$ The following information is available:

$1.$

Expected sales from May to August $2024$ are as follows:

May

R$750000$

June

R$850000$

July

R$1500000$

August

R$1000000$

$2.$

Historically $70\%$ of the company$$s sales has been on cash and the rest on credit. Twenty percent $(20\%)$ of the cash sales is subject to a discount of $10\%.$

$3.$

Sixty percent $(60\%)$ of the credit sales is usually collected in the month after the sales, thirty five percent $(35\%)$ is collected two months after the sale and the balance is written off as bad debts.

$4.$

During August $2024$ the company expects to receive a dividend of $8$ cents per share on the $70000$ shares that it holds in Camry Limited.

$5.$

The company$$s purchases of inventory are estimated to be $60\%$ of sales. Thirty percent $(30\%)$ is paid in cash and a discount of $10\%$ is receivable. The balance is paid in the month after the purchase. $($Separate entries are required for the cash purchases and payments for credit purchases.$)$

$6.$

The monthly rental, payable at the end of each month, will increase by $10\%$ with effect from $01$ August $2024.$ The rental payable on $31$ August is R$26400.$

$7.$

The fixed salary cost for $2024$ is R$420000$ and is paid evenly every month.

$8.$

Interest on loan for two months at a rate of $15\%$ per year is payable on the loan balance of R$150000$ during August $2024.$

$9.$

New machinery with a cost price of R$450000$ will be purchased and paid for during July $2024.$

$10.$

Other cash operating expenses are forecast at R$200000$ for June $2024$ and are expected to increase by $5\%$ each month.

$11.$

Cash in the bank on $30$ June $2024$ is expected to amount to R$20000.$