Given below are details of some of the budgets of S Ltd for the eight months ending

28 February 2021:

Month Sales in Units Wages Overhead Expenses

$000 $000

July 2020 8 000 190 85

August 2020 9 500 220 104

September 2020 10 500 250 112

October 2020 12 000 270 120

November 2020 9 000 240 100

December 2020 10 000 220 101

January 2021 8 500 200 97

February 2021 9 000 230 99

Notes:

1. Units are purchased at a standard cost of $60 each. Purchases are planned so that at the end of each month the stock is sufficient to meet the forecast sales target for the following two months.
2. All sales are made at a price of $100 per unit. One half of the sales are made for immediate cash settlement. The remainder of the sales are on credit. Payment for credit sales is received as follows: 75% in the month following sale and 25% in the month after that.
3. All purchases of units are made on one months credit.
4. Wages and overhead expenses are paid as incurred. From 1 October 2020 a wage rise of 10% has been agreed. This pay rise was agreed only after the budgets had been prepared

and is not allowed for in the figure given above.

5. The company is repaying a bank loan at the rate of $30 000 a month and interest on the loan to be paid in September and December 2020 is expected to be $45 000 and $40 000 respectively. Interest on bank overdraft due in December 2020 is established to be $3 000.
6. In September 2020 $40 000 will be paid as a 10% deposit on a new machine. In December 2020 when the machine is expected to be installed and in full production the balance due will be paid.
7. Tax of $150 000 has to be paid by the company on 1 December 2020.
8. It had been estimated that the stock at 1 July 2020 would be 17 500 units and that at

1 September 2020 the cash at the bank would be $24 000.

Required:

1. The Purchases budget in units for the six months from July December 2020.

(7 marks)

2. The Cash budget for the four months of September, October, November and December 2020. (NB: Show all Workings) (18 marks)