please help me with the financing section on the cash budget.
QUESHON 1 The Paper Clip 8 Office Buddies trades in office supplies. stationery and oflice furniture. The company uses budgeting for managerial accounting and cost control purposes. The year end for Management of The Paper Clip and Office Buddies is currently planning for the financial year ending 30 June 2021 and have asked you for assistance in this planning. The Paper Clip 2; Ofce Buddies made the following information available to you to assist the financial accountant in the budgeting process: 0 Estimated cash collections from sales: - 50% within the month of sales (statistics show that 50% of these collections quality for a cash discount of 5%); - 30% within the month following on the month of sales; and - 10% within second month tollowing on the month of sales. 0 Budgeted sales for the first four months of the year ending 30 June 2021: July: R2 200 000 August: R2 500 000 September: R2 300 000 October: R2 400 000 The debtors balance in the Statement of Financial Position as at 30 June 2020 (see below) represents the total outstanding amount for May and June sales. The same pattern of collection incurred as in the note above. 0 Actual sales for the month Of June 2020 totalled R2 300 000. - The gross profit percentage is 45%. . Purchases of merchandise from 1 July 1 2020 will be done in such a way that the ending inventory of any month be equal to 75% of the following month's sales requirements. Payments for merchandise purchases occurs as follows: 50% (less 5% discount) is paid during the month of purchase and the rest the following month. Creditors in the provided Statement of Financial Position as at 30 June 2020 is for purchases of merchandise and the outstanding Rent (see the applicable note below). . Additional cash expenses for sales and administration cost per month amounts to R350 000 payable in the month it occurs, plus 10% commission payable on sates. The commission is paid in the month following the month in which it incurred. I Rent (due monthly) totals to R50 000 per month. However; included in the Creditors balance in the Statement of Financial Position as at 30 June 2020 an amount of R100 000 is for overdue rent. which will be paid during July 2020. o Depreciation on delivery vehicles amounts to R10 000 per month. - Fixed assets to the value of R530 000 wiil be purchased and paid for in July 2020. . Dividends of R120 000 are declared semi-annually (June and December) and paid one month after declaration. o A minimum balance of R500000 is maintained in the company's current account. An agreement with the bank stipulates that the company can get short-term financing by REKPG'TS-ZOZO-Jurle Test 219 means of a short-term loan account, for the required amount for periods of up to six months. Funds are borrowed at the beginning of a month and capital/plincipal paid back at the end of a month. Interest is due and payable on a monthly basis at 10% per annum; calculated on the principal debt at month-end (before any principal is paid back). a Statement of Financial Position: The Paper Ciip & Office Buddies Limited Statement of Financiai Position as at 30 June 2020 (R (R) ASSEI'S Non-corral! Assets Fixed Assets 2 300 000 Cost Price 2 800 000 Accumulated Depreciation 500 000 Goodwill Total Non-current Assets 2 300 000 Current Assets Inventory 907 500 Debtors 1 150 000 Bank Current Account 500 000 Total Current Assets 2 557 500 Total Assets 4 85? 500
