QUESTION FOUR [25]

The following information was provided by Zepi Traders:

1. The bank balance on 31 July 2021 is expected to be R100 000 (unfavourable)

2. The expected total sales are as follows:

July 2021	R200 000
August 2021	R160 000
September 2021	R150 000
October 2021	R140 000

3. Cash sales are estimated at 50% of total sales, they are entitled to a discount of 3% and the balance is on credit.

4. Collection of credit sales are as follows:

40% in the month of sale 55% one month after the sale and the balance written off as irrecoverable.

5. Budgeted credit purchases of inventory are as follows:

July 2021	R80 000
August 2021	R60 000
September 2021	R50 000
October 2021	R90 000

6. Credit purchases are paid in the month following the credit purchases, less 4% discount.

7. Insurance amount to R90 000 per annum, payable in equal monthly instalments.

8. An investment of R200 000 matures on 30 September 2021. On this date the capital amount together with interest of R17 000 will be received.

9. Variable selling expenses are estimated at 7% of total sales and are paid in the month of the sale.

11. Rent expenses amount to R12 000 per month, payable monthly. Rent will increase by 9% from 1 September 2021.

Required:

4.1. Prepare a Debtors collection schedule for August, September and October 2021. (6)

4.2. Prepare a Cash Budget Statement for August, September and October 2021. (19)