QUESTION 4

(20 Marks)

REQUIRED

Use the information providedby Empire Tradersto prepare the following for March and April 2024:

1. Debtors Collection Schedule (4 marks)
2. Cash Budget. (16 marks)

INFORMATION

The followinginformation was providedby Empire Traders:

1. Empire Traders expectsto have a favourable bank balance of R60 000 on 28 February 2024.
2. Budgeted sales figuresfor 2024 are as follows:

	January	February	March	April
Cash sales	R320 000	R370 000	R310 000	R250 000
Credit sales	R370 000	R390 000	R320 000	R300 000

1. Thirty percent (30%) of the cash sales is to informaltraders who are entitled to a discountof 10%. Collections from debtors are usually as follows:
   • 80% is collected in the month after the sale.
   • 20% is collected two months after the sale.
2. Purchases of inventoryare expected to be as follows:

	January	February	March	April
Total purchases	R410 000	R460 000	R400 000	R380 000

1. Sixty percent (60%) of the purchases is for cash to take advantage of a discount of 15%. The balance is purchased on credit. Creditors are paid two months after the month of purchase. (Separate entries for cash and credit payments are required.)
2. The proprietors monthlydrawings comprise R12 000 inventory and R10 000 cash.
3. The monthly salaries are expected to amount to R194 400 for April 2024 after an increase of 8% takes effect on 01 April 2024.
4. A fixed deposit, R100 000, will mature (expire) on 31 March 2024. Interest at 12% per annum for three months will also be received.
5. Equipment with a cost price R160 000 will be purchased on 31 March 2024. A deposit 25% will be paid on this date. The balance will be paid in four equal monthly instalments commencing 30 April 2024.
6. Other cash operating expensesare expected to amount to R160 000 for February2024 and are expected to increase by 5% each month thereafter.