QUESTION ONE $[35]$

You are provided with information relating to Dodo$$s Enterprises for the two months ending $31$ January $2023.$ Mrs Gomo owns the business. The business has overdraft bank facilities of R $50000.$

$1.$

Sales and Cost of Sales

Actual Sales

Budgeted Sales

Cost of Sales

October $2022$

$140000$

$85000$

November $2022$

$160000$

$100000$

December $2022$

$180000$

$125000$

January $2023$

$220000$

$165000$

$2.20\%$ of the total sales are on credit.

$3.$ Debtors are expected to pay their accounts as follows:

$-70\%$ in the month following the month of the sale.

$-28\%$ two months following the month of the sale.

$-2\%$ is to be written off in the third month following the month of the sale.

$4.$ A fixed level of trading stock on hand is maintained throughout the year through

replacement monthly.

$5.$ Purchases of stock:

$-65\%$ of all stock is bought on credit.

$-$ Creditors are paid in full in the month following the month of purchase to qualify

for a $5\%$ discount.

$6.$ It has been agreed that the owner Mrs$.$ Gomo, will take unused equipment at book value in January for her own use, worth R$2000.$

$7.$ R$150000$ was invested in fixed deposits with Tar Bank on $1$ November $2022.$ Interest is received monthly at $12\%$ per annum; half of these fixed deposits matures on $31$ December $2022.$ The rest matures in February $2023.$

$1$

$8.$ Rent of R$12000$ is payable to Shaky$-$Shaky Providers at the start of each month. This will be increased by $10\%$ with effect from $1$ January $2023.$

$9.$ Total salaries for November $2022$ amounts to R$22000.$ One employee, who earns R$2500$ per month, will leave the business at the end of November $2022.$ The salaries of the remaining employees will be increased by $10\%$ with effect from $1$ January $2023.$

$10.$ A vehicle with a carrying value of R$65500$ will be traded$-$in at book value on $1$ December $2022$ for a new vehicle costing R$175000.$ A deposit of R$4500$ will be paid on $1$ December $2022$ and the balance of the outstanding amount will be paid in six equal instalments commencing $1$ January $2023.$

$11.$ The bookkeeper is paid a monthly fee of R$2500.$

$12.$ Other operating expenses were R$8500$ for November. These expenses are expected to increase by R$750$ each month thereafter.

$13.$ The business has an overdraft of R$21000$ at the beginning of December $2022.$ Interest is calculated by the bank on the balances at the beginning of each month. Provide for interest at the following rates $($calculations to the nearest R$.)$:

$-$ Unfavourable balance: $2\%$ per month.

$-$ Favourable balance: $1\%$ per month.

Required:

$1\mathrm{.}1$

Debtors Collection Schedule for the period $1$ December $2022$ to $31$ January $2023.(10)$

$1\mathrm{.}2$

Cash budget for the period $1$ December $2022$ to $31$ January $2023.(25)$