QUESTION 5 (20 Marks) REQUIRED

Prepare the Cash Budget for October, November and December 2023 from the information provided below

Note: Where applicable, round off amounts to the nearest Rand. Use separate monetary columns for each month.

INFORMATION The information given below has been made available by Pep Retailers to assist in the preparation of the cash budget for the fourth quarter of 2023. 1. Estimated cash sales after a 10% cash discount are as follows:

1. September R720 000
2. October R792 000
3. November R864 000
4. December R1 044 000

2. Forty percent (40%) of the sales is for cash and 60% is on credit.

3. Payments by debtors for credit sales are received in the month after the sale.

4. Expected inventory purchases (excluding discounts) are as follows:

1. September R960 000
2. October R1 040 000
3. November R1 120 000
4. December R680 000

Inventory purchases are paid for in the month of the purchase to take advantage of a 10% discount.

5. Details regarding recurring monthly expenses are as follows:

5.1 The salary bill for December 2023 is R316 800, 10% more than the salaries for each of the preceding two months.

5.2 Other monthly expenses are paid monthly and amount to R384 000, including depreciation of R80 000.

6. Pep Retailers is expected to obtain a long-term loan of R560 000 on 01 November 2023 with an expansion project in mind for 2024. Interest is charged at 18% per annum. Capital repayments of R20 000 and interest are to be paid monthly, commencing 30 November 2023.

7. The annual property rates will be paid 01 November 2023. The assessment for the year is calculated at R4 per R100 of the property value. The property is valued at R1 800 000.

8. Pep Retailers expects to have an unfavourable bank balance of R100 000 on 30 September 2023