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Question 4 Marks) (25 Quail Limited is a retail distributor for computer hardware, related software and support services. The management accountant has prepared sales budgets
Question 4 Marks) (25 Quail Limited is a retail distributor for computer hardware, related software and support services. The management accountant has prepared sales budgets for the first semester of 20x20. These are presented below: Month Total Sales January R550 000 February R500 000 March R480 000 April R400 000 May R425 000 June R600 000 Cash sales amount to 25% of the total sales. Collections of the credit sales are as follows: 40% in the month of sale and it is subject to a 4% discount 30% one month after the month of sale 28% two months after the month of sale 2% in uncollectable Quail Limited's inventory requirements are equal to 30% of the next month's sales. The purchasers' terms of payment require a down payment of 45% and the balance is payable 30 days thereafter. July's total sales are expected to be R620 000. Quail Limited had a bank overdraft of R150 000 on 1 May 20x20. Required: Prepare a cash budget for Quail Limited by month for May and June 20x20. Show all your calculations
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