Question 1

Your executive, Mr Bennet, has asked you to create a cash budget for the second financial quarter of this year, i.e. April June.

You request the first financial quarters cash flow figures (i.e. January March) from the Finance Department in order to assist you with your budget. You receive the following information:

Item	January March
Opening cash balance	217,000
Expected cash receipts:
Cash sales	341,000
Collection of accounts receivable	552,000
Other income	0
Total cash receipts	893,000

Expected cash payments:
Raw materials (or inventory)	420,000
Payroll	245,400
Other direct expenses	14,000
Advertising	58,000
Selling expenses	61,000
Administrative expenses	72,300
Plant and equipment expenses	203,000
Other payments	7,000
Total cash expenses	1,080,700
Closing cash surplus (or deficit)	29,300

In order for your cash budget for this second financial quarter to be fairly accurate, you look into the figures of the company more closely and manage to find out the following:

There was a 15% slump in sales in the second financial quarter of last year.

There was a 3% increase in all the expense categories in the second financial quarter of last year, except for electricity (for the general office), equipment repairs and inventory which increased by 7%. Note: Electricity (for the general office) accounts for 40% of its applicable expense category. Round off any numbers to the nearest Rand.

Total accounts receivable for the first financial quarter of this year (i.e. January March) was R675,000.

Total accounts receivable for the month of April this year is R825,000.

Using this information, provide an expected cash budget for the second financial quarter of this year (i.e. April June). Display your cash budget in the same format as the first financial quarter provided above. Do not split your cash budget into months. Create your budget either using a table in this document or you can create it in Excel and then insert a screenshot of it into this document.

In addition, underneath your table or Excel screenshot, show your workings for the following three items:

Cash sales

Accounts receivable

Electricity and its applicable expense category

Insert your table or screenshot here:

Show your workings here: