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 planning 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 finished 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 collected in the month of the sale and these debtors are entitled to a $5\%$ discount.

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

The balance of the sales is for cash.

The expected unit primary costs of production are as follows:

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 line 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.$)$