QUESTION SIX Mwanjabantu Limited makes and sells newspapers, magazines, books and confectionery. The following information is available for use in the budgeting process for the year to 31 December 2013 1. The average selling price per product is K2 Jan Feb Mar April May June July Sales (Units) 5,000 6,000 7,500 6,000 5,500 4,500 6,000 2. The cost of sales is 40% of sales value 3. Monthly expenditures Salaries and wages Selling and distribution costs Rent Electricity and telephone Insurance Depreciation 2,000 7.5% of sales 1,000 500 500 500 4. Forecasted balances at 31 December 2012 Debtors Stocks Bank balance Creditors: November purchases Creditors: December purchases 3,500 4,500 2,500 3,800 3,500 5. Stock equal to the following one month's sales (at cost price) at the end of each month 6. Cash flow timing information a) Sales revenue: 50% receivable during the month of sale, 50% during next month b) Annual insurance premium of K6,000 is paid in January 2013 c) Mwanjabantu Limited has arranged with its suppliers to pay on 60-day terms d) Salaries and wages, selling and distribution, and rent: 100% payable during the month in which they are earned or incurred. e) Electricity and telephone are paid quarterly in arrears in March and June. 7. Other expenditures are as follows: a) Capital expenditure of K2,500 committed in March; b) Income tax of K5,000 due in April; c) K3,000 of dividends due to be paid in June; d) loan repayment of K1,000 due in February. Required: a) Prepare a cash budget for Mwanjabantu Limited for each month of the year to 30 June 2013. All relevant working calculations must be shown (12 marks)