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QUESTION ONE [30] You are provided with information relating to Cell-Cell Providers for the two months ending 31 January 2021. Molly Sums owns the business. The business has overdraft bank facilities of R50 000. 1. Sales and Cost of Sales Actual Sales Budgeted Sales Cost of Sales October 2020 100 000 75 000 November 2020 120 000 90 000 December 2020 160 000 120 000 January 2021 200 000 150 000 2. 20% of the total sales are credit. 3. 4. 5. 6. Debtors are expected to pay their accounts as follows: - 70 % in the month following the month of the sale. - 28 % two months following the month of the sale. 2% is to be written off in the third month following the month of the sale. A fixed level of trading stock on hand is maintained throughout the year through replacement on a monthly basis. Purchases of stock: - 65 % of all stock is bought on credit. - Creditors are paid in full in the month following the month of purchase to qualify for a 5% discount. It has been agreed that the owner M. Sums, will take unused equipment at book value in January for her own use, worth R 2 000. R 120 000 was invested in fixed deposits with Tar Bank on 1 November 2010. Interest is received on a monthly basis at 15% p.a; half of these fixed deposits matures on 31 December 2020. The rest matures in February 2021. Rent of R 9 000 is payable by Cell-Cell Providers at the start of each month. This will be increased by 5% with effect from 1 January 2021. Total salaries for November 2020 amounts to R 18 000. One employee, who earns R 1800 per month, will leave the business at the end of November 2020. The salaries of the remaining employees will be increased by 10 % with effect from 1 January 2021. A vehicle with a carrying value of R 50 500 will be traded-in at book value on 1 December 2020 for a new vehicle costing R 160 000. A deposit of R 19 500 will be paid on 1 December 2020 and the balance of the outstanding amount will be paid in six equal instalments commencing 1 January 2021. 7. 8. 9. 10. . 11. The bookkeeper is paid a monthly fee of R 2 000. 12. Other operating expenses were R 7 500 for November. These expenses are expected to increase by R 500 each month thereafter. 13. The business has an overdraft of R 17 000 at the beginning of December 2020. Interest is calculated by the bank on the balances at the beginning of each month. Provide for interest at the following rates (calculations to the nearest R.): - Unfavourable balance: 2% per month. - Favourable balance: 1 % per month. Required: 1.1 Debtors Collection Schedule for the period 1 December 2020 to 31 January 2021. (10) 1.2 Cash Budget for the period 1 December 2020 to 31 January 2021. (20)