Required: prepare cash budget for May 2017

(cost and management accounting fundamental: budgets)

Quall Lid. Is a retail tributor of computer hardware, related software and support services. The management accountant has prepared sales budgets for the first semester of 2017. These are presented below: Month Total Sales (R) January 550 000 February 500 000 March 480 000 April 400 000 May 425 000 June 600 000 July 620 000 Cash sales amount to 25% of the total sales. Collections of the credit sales are as follows: 40% in the month of sale and is subject to a 4% discount. 30% one month after the month of sale . . 28% two months after the month of sale and the remainder is uncollectible. Quail Lid.'s inventory requirements are equal to 30% of the next month's sales value. The purchases' terms of payment require a down payment of 45% and the balance is payable in the following month. Other expected expenses for May 2017 include the following: Selling and marketing costs (Note 1) R3 500 Depreciation R15 000 Loss on sale of computer equipment (Note 2) R5 000 Purchase price of new computer equipment (Note 2) R50 000 Note 1 Selling and marketing costs are paid in cash in the month it is incurred. Note 2 Quail Lid plans on replacing the office computer equipment that is used for general administration of the business (i.e. not inventory) during May 2017. The financial accountant's calculations indicate a loss on the replacement of R5 000. Quail Lid will have to pay a 50% cash deposit on the last day of May 2017 and the balance in June 2017. Note 3 The closing balance of bank as on 30 April 2017 amounted to an overdraft of R150 000