Question
QUESTION 1 (20) Required: Use the information given below to prepare the following for Altech Limited for July and August 2021: 1.1 Debtors Collection Schedule
QUESTION 1 (20)
Required:
Use the information given below to prepare the following for Altech Limited for July and August 2021:
1.1 Debtors Collection Schedule (4)
1.2 Cash Budget (16)
Note: Provide separate monetary columns for each month. Where applicable, round off amounts to the nearest Rand.
Information:
Extract of Statement of Comprehensive Income for the month ended 30 June 2021
R
Sales 200 000
Cost of sales 100 000
Rent income 8 000
Advertising 4 000
Salaries and wages 10 000
Rates and taxes 1 200
Electricity 3 000
Other operating expenses 9 000
Additional information:
- The business uses a fixed mark-up of 100% on cost.
- Sales are expected to increase by 10% each month.
- Thirty percent (30%) of the sales are for cash and the balance is on credit. Collections from credit sales are as follows:
- 40% in the month of the sale, and these customers are entitled to a 2% discount; 55% one month after the sale.
- The balance is usually written off as bad debts.
- Closing Inventories are kept at a constant level. 50% of purchases are for cash. Creditors are paid one month after purchase.
- In terms of the lease agreement, the rental income will increase by 10% per annum with effect from 01 July 2021. Rent is received monthly.
- Advertising is paid monthly and is estimated to be the same percentage of sales as for June 2021.
- Salaries and wages will increase by 10% with effect from 01 July 2021.
- Rates and taxes will be paid in one instalment for the year during July 2021. Rates to be paid will amount to R6 000.
- Other operating expenses are expected to increase by R500 every month. These expenses are paid for in the month in which they are incurred.
- Electricity is expected to increase by 12% from 1 August 2021 due to tariff increases
- The balance in the bank on 30 June 2021 is estimated to be R40 000 (favourable).
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