B). Pasico Ghana Ltd is an agro-processing company situated in the SADA area. The company is preparing its budget for the first three months of 2020 and has approached you for assistance. The following is available:

i). Accounts payable figure of GHC14,000 as of 31st December, 2019 be paid in January, 2020

ii). Information extracted from the Sales budget are as follows:

November 2019 December 2019 January 2020 February 2020 March 2020

GHC

160,000 180,000 150,000 200,000 280,000

iii). Sales will be divided equally between cash and credit sales. Debtors settle according to the following pattern:-

70% within the month of sale

20% in the month following

10% in the second month after sales

iv). Extracts from the Purchases budget were as follows:

December 2019 January 2020 February 2020 March 2020

GHC 120,000

100,000 100,000 120,000

All purchases are on credit. Three-quarters are settled in the month following purchase and the balance settled in the second month after purchase.

(iv) Wages are expected to be as follows:

GHC

January 2020 February 2020

March 2020

These are to be paid one month in arrears.

75,000 55,000 60,000

(v) Electricity of GHC2,500 per month is to be paid one month in advance.

(vi) Corporate tax GHC15,000 is expected to be paid in March 2013.

(vii) The company will receive settlement of an insurance claim of GHC5,000 in March 2020. (viii)Overheads are expected to be GHC125,000 every month. (This includes depreciation of GHC 5, 000).

(ix) The company has an overdraft facility with Fidelity Bank Ghana Ltd for the purpose of its day-to-day operations in multiples of GHC20, 000 at 15% interest payable in the subsequent month. Minimum requirement for each month should be 50,000

Required:

i. Show the total debtor collection for the first quarter of 2020. [10 marks]

ii. Show the total payments to creditors for the first quarter of 2020 [6 marks]

iii. Prepare a monthly cash budget for the first quarter of 2020. [22 marks]