QUESTION 3 (20 MARKS) The following information was taken from the financial records of Max Traders Limited. The accounting period of Max Traders Limited ends annually on 28 February Extract from the statement of financial position as at 28 February 2018 R Equity and liabilities Issued share capital (200 000 ordinary shares) 437200 Mortgage bond 111 000 Bank overdratt 15 400 ADDITIONAL INFORMATION: 1. Sales take place as follows: Cash sales 20% Credit sales 80% 2 The actual and projected total sales are given below. ACTUAL TOTAL SALES BUDGETED TOTAL SALES 2018 2019 2019 December January February March April R R R R R 19950 28 500 42750 21 375 17 100 Credit sales are normally collected as folows: 20% in the month of sale 75% in the month following the sale live after 30 days) and the balance in the second month following the sale i.e. after 60 days). All purchases are done on a cash only basis. The actual and projected purchases are given below. ACTUAL CASH PURCHASES BUDGETED CASH PURCHASES 2018 2019 December January February March April R R R R R 15618 22 344 33 972 16 416 12 882 5. The company will offer 75 000 shares on 1 March 2019 to existing shareholders at R2.18 per share. Ai monies will be received during March 2019. When applications closed on 31 March 2019, applications had been received for 75 000 shares and the full amount will be allotted 6. Other monthly expenses from 1 January 2019 Advertising costs/March & April) R456 per month Salaries March & April R14 500 per month Telephone March) R840 Telephone April) R1 575 2019 Page 5 of 6 SSAO - ACCOBB1REKOB01 - Accounting B 7. The mortgage bond is reduced annually on 1 March by an instalment of R14 800 Interest is charged at 18% p.a and is payable at the end of every second month (ie 30 April, 30 June. 31 August, 31 October 31 December and 28 February REQUIRED: Prepare the cash budget of Max Traders Limited for the period 1 March 2019 to 30 April 2019. The cash budget must be balanced at the end of each month (20)