COURSE: ACCOUNTING B QUESTION 3 [20 MARKS) The following information was taken from the financial records of NB Cables and Electrical Limited. The accounting period of NB Cables and Electrical Limited ends annually on 31 December INFORMATION: EXTRACT FROM THE STATEMENT OF FINANCIAL POSITION AS AT 31 OCTOBER 2014 R Equity and liabilities Issued Share capital (200 000 ordinary shares) 300 000 Loan Bank overdraft 18 500 1. The company sells its inventory for both cash and credit. The following pattern is noted with regards to the sales over the past few years: 100 000 Cash sales Credit sales 25% of total sales 75% of total sales 2. The actual and projected total sales are given below. ACTUAL TOTAL SALES 2014 August September R R 20 000 28 000 October R 42 000 PROJECTED TOTAL SALES 2014 November R 22 000 December R 16 500 3. As in the past, credit sales are collected as follows: - 20% in the month of sale: 75% in the month following the month of sale (i.e. after 30 days), and - the balance in the second month following the month of sale (i.e. after 60 days) All purchases will be settled in the month following the month of purchases. The actual and projected purchases are given below. August R 15 000 ACTUAL PURCHASES 2014 September R 21 000 October R 15 400 PROJECTED PURCHASES 2014 November R 12 980 December R 33 000 COURSE: ACCOUNTING B QUESTION 3. CONTINUED 5 The company has an authorised ordinary share capital of 245 000 and will offer the unissued ordinary shares to existing shareholders at R2,00 per share on 1 December 2014. All monies will be received during December 2014 Other monthly expenses that remain consistent from month to month are as follows: : Sundry expenses R550 Salaries R18 000 The mortgage bond is reduced annually on 1 November by an instalment of R15 000. Interest is charged at 18% pa, and is payable at the end of every second month (ie. 28 February, 30 April, 30 June 31 August, 31 October and 31 December). Bonuses of 10% on all salaries will be paid with the November salary run. 7. 8. REQUIRED: Prepare the cash budget of NB Cables and Electrical Limited for the period 1 November 2014 10 31 December 2014. The cash budget must be balanced at the end of each month. (20)