D I Course X I a [x T} X I Eli Dashbt X I a 'Paper XI @ Paper X IE PaperE X I a MBA) X I a MBA) X I 9 https:/, X I a Cheat, X I + 7 E G (D File I C:/Users/10101882/Document5/2022%20PERSONAL/WITS%202022/Financial%20Management%20Accountin... Q is E. {3 {'5 G. g \"a El 2' l6lf60~ +'QI|CI3lA\"I le'E'vQIGJ QUESTION 4 (YELLOW BOOK) 25 MARKS Caddies Limited is a merchandising company that sells romantic supplies. The company is planning its cash needs for August 2017 to ensure that it has adequate supplies and cash reserves to support the upcoming Women's Day, In the past. Caddies Limited has had to borrow money during August to support peak sales leading to the 9th of August. The following intormation has been assembled to assist in preparing a cash budget for February 2017. Extracts from the budgeted monthly income statement tor June to August are as tollows: June July August September 2011 2017 2017 2017 50 000 " 'i'u'hhh ' " 20 000 1. Sales are 30% for cash and 70% on credit. 2. Credit sales are collected over a three-month period with a 20% collected in the month of sale, 50% in the month following sale, and 30% in the second month following sale. 3. Inventory purchases are paid for as tollows: 40% of a month's inventory purchases are paid for in the month of purchase. The remaining 60% is paid in the month alter that (i,e.. after 30 days). 4. The company maintains its ending inventory levels at 75% of the cost of the merchandise to be sold in the following month. 5. Salaries and wages that will be expensed in the income statement during August 2017 add up to R32 250 and comprise the following. basic salaries and wages of R27 750, leave pay provision of R2 500 and Pay As You Earn (PAYE) ot R2 000 (July 2017 was R2 250). Leave pay provision is accrued when the employees are entitled to the leave and reversed when employees take the leave or leave days are forfeited, PAVE is paid to SARS on the 1th 01 the month followmg the month of the salary payment. REQUIRED D I Course X I a [1x Tt X I 2: Dashbt X I a 'Paper XI @ Paper X I@ PaperE X I a MBA] X I @ MBA} X I 9 https:/, X I a Cheat, X I + G of6 I e Q (D File I C:/U5ers/10101882/Documants/2022%20PERSONAL/WITS%202022/Financial%20Management%20Accounting/Ne... + 'Q I-ICIBlA\"IlVV Credit sales are collected over a three-month period With a 20% collected in the month or sale, 50% in the month following sale, and 30% in the second month following sale. Inventory purchases are paid for as follows: 40% of a month's inventory purchases are paid for in the month of purchase. The remaining 60% is paid in the month after that (Le, after 30 days). The company maintains its ending inventory levels at 75% of the cost of the merchandise to be sold in the following month. Salaries and wages that will be expensed in the income statement during August 2017 add up to R32 250 and comprise the following: basic salaries and wages of R27 750, leave pay provision of R2 500 and Pay As You Earn (PAYE) of R2 000 (July 2017 was R2 250). Leave pay provision is accrued when the employees are entitled to the leave and reversed when employees take the leave or leave days are forfeited. PAYE is paid to SARS on the 7th of the month following the month of the salary payment. REQUIRED Marks Determine how much cash shortage Caddies Limited will experience and need to 16 plan for in the month of August 2017. Hint: Prepare the cash budget for the month ended 31 August 2017 (for the one month only). (13) Describe four ways in which Caddies Limited can address the short-fall (if any). 4 (0) Comment on the concerns (if any) you have in respect of the nancial performance of Caddies Limited for the month end 31 August 2017 and how you would suggest that the concerns be dealt with. TOTAL 25 i'mi 'E'leG'llEl