QUESTION TWO

2.1 Explain what a budgeting is and how a good budgeting process benefits a company? (4)

2.2 List four (4) advantages of budgeting. (4)

2.3 Orange Juice Limited has presented the following estimates relating to 2019 activities: ( look at the image )

2.3.1 Prepare a schedule of receipts from debtors showing cash collections for each quarter of 2019 (5)

2.3.2 Prepare the cash budget for each quarter (20)

QUESTION TWO [33] 2.1 Explain what a budgeting is and how a good budgeting process benefits a company? ( (4) 2.2 List four (4) advantages of budgeting. (4) 2.3 Orange Juice Limited has presented the following estimates relating to 2019 activities: Sales revenue Purchases Cost of sales Administrative expenses Occupancy expenses Depreciation expense Quarter ending 31 March 30 June 600 000 750 000 350 000 400 000 300 000 375 000 125 000 125 000 55 000 55 000 15 750 15 750 30 September 820 000 400 000 410 000 125 000 55 000 15 750 31 December 870 000 420 000 435 000 125 000 55 000 15 750 The following information was given: a) Sales in the December quarter 2018 were R 500 000. b) All sales are on credit, of which 60 per cent are collected in the quarter of sale and 40 per cent in the following quarter. c) d) Purchases are on credit, and entity policy is such that all purchases are paid for in the same quarter. The administration expenses incurred and paid are the same. Occupancy expenses incurred and paid are the same, except that the December quarter does not include the last month's utility's R785 IT hardware acquisition of R 27 420, to be paid for in cash, is expected in the December quarter. The bank balance at 31 December 2018 was R25 400. 1) Required: 2.3.1 Prepare a schedule of receipts from debtors showing cash collections for each quarter of 2019 (5) 2.3.2 Prepare the cash budget for each quarter (20)