QUESTION 4

20 MARKS

4.1

WHETSTONE RETAILERS
DEBTORS COLLECTION SCHEDULE
	Credit sales R	January R		February R		March R

(6 marks)

4.2

WHETSTONE RETAILERS
CASH BUDGET FOR THE PERIOD 01 JANUARY TO 31 MARCH 2022
	January		February		March
Cash receipts
Cash payments
Cash surplus (shortfall)
Opening cash balance
Closing cash balance

(14 marks)

REQUIRED Use the information provided below to prepare the following for January, February and March 2022: 4.1 Debtors Collection Schedule (6 marks) 4.2 Cash Budget (14 marks) INFORMATION The information given below was made available by Whetstone Retailers to assist in the preparation of the cash budget for the first quarter of 2022 1 Estimated sales are as follows: December 2021 R190 000 January 2022 R210 000 February 2022 R230 000 March 2022 R250 000 2. 3. 4. Thirty percent (30%) of the sales is for cash and 70% is on credit Payment for 20% of the credit sales is received in the month of the sale subject to a 2% discount. The balance is collected in the month after the sale. It is a policy of the business to maintain a fixed inventory level at the end of each month. The inventories are sold at cost plus 100% Sixty percent (60%) of the inventory purchases is for cash and the balance is on credit 5. Salaries and wages for March 2022 are expected to amount to R38 500 after an increase of 10% takes effect from 01 March 2022 6. The annual property rates will be paid 01 February 2022. Rates are calculated at 1.5 cents for every R1 of the market value of the property. The market value of the property is R900 000. 7. Other operating expenses are paid monthly and are budgeted at R63 000, including R10 000 for depreciation Whetstone Retailers expects to obtain a long-term loan of R200 000 on 01 March 2022. Interest is charged at 15% per annum and interest is payable monthly, commencing March 2022. 9. An old vehicle with a cost price of R180 000 and accumulated depreciation of R150 000 is expected to be sold at a loss of R10 000 during March 2022. 10. Whetstone Retailers anticipates a favourable bank balance of R20 000 on 31 December 2021. 8