QUESTION $3$

$(20$ Marks$)$

REQUIRED

Use the information provided below to prepare the following for August and September $2024$:

$3\mathrm{.}1$ Debtors Collection Schedule

$(4$ marks$)$

$3\mathrm{.}2$ Cash Budget

$(16$ marks$)$

INFORMATION

Nissa Limited is planring its business activities for August and September $2024.$ The bank account is

expected to reflect an overdraft of R$50000$ on $31$ July $2024.$ The following forecasts have been made by

Nissa Limited:

The sales manager anticipates the following sales volumes of firished goods at a constant price of

R$320$ per unit:

Sixty percent $(60\%)$ of the sales is expected to be on credit and the collections are expected to be as

follows:

$30\%$ is colected in the month of the sale and these debtors are enitied to a $5\%$ discount.

$70\%$ is colected in the month after the sale.

The balance of the sales is for cash.

The expected unit orimarv costs of production are as folows:

Management aims to maintain a month$-$end inventory of finished goods of $10\%$ of the expected sales

of the following month. Materials are purchased for cash to meet the production requirements of each

month. $($Hint: Prepare a production budget first to determine the production requirements.$)$

Direct labour costs are incurred in Iine with production and are paid in the month in which they were

incurred.

Variable overheads are budgeted at R$30$ per unit produced. Fixed overheads are estimated to be

R$120000$ per month. Overheads are payable in the month in which they are incurred. $($Separate

entries are required for fixed and variable overheads.$)$

P$250000$ cash will be spent on the purchase of a vehicle during September $2024.$

The company intends investing $10\%$ of the total sales value $($before any discounts$)$ of each month in

an investment account from August $2024$ to finance the modernisation of its machinery during $2025.$

As from August $2024,2\%$ of the total sales revenue $($before any discounts$)$ will be utlised for research

and development. These costs are payable in the month after they are incurred.