Required to:

Prepare the Cash Budget for the period 1 October 2021 to 31 December 2021. (21 marks)

3. Total sales is as follows: 4. 40% of all sales are on credit 5. The amounts owing by debtors are collected as follows: 40% in the month of sale and a 2.5% discount is given to these debtors for prompt settlement 35% after 30 days 20% after 60 days - The rest is written off as irrecoverable after 90 days 6. The business uses a fixed stock base and buys what it sells at the end of each month. 7. A fixed mark up percentage of 50% on cost is used. 8. 25% of purchases are paid in cash 9. 90% of creditors are paid in the month following the purchase and a discount of 5% is received on these payments. The remainder of creditors are paid after 60 days. 11. Advertising costs are based on projected monthly total sales and are paid in the same month by cheque. The advertising costs are expected to increase from 3% to 4% on sales on 1 December 2021 . 12. Other operating expenses will amount to R16 000 per month. 13. A new laptop computer valued at R18 000 will be purchased on credit during November 2021. A 50\% deposit will be paid at this time. The balance will be repaid in two equal monthly instalments starting in December 2021. The old laptop will be sold at a loss of R1 000 to a member of staff for cash on 15 December 2021 . The cost price of the old laptop is R15 000 and the carrying value on 15 December 2021 is R6 000 . 14. Equipment is depreciated at 15% per annum on cost. 15. The loan was taken two years ago. The loan instalment, which includes interest, amounts to R2 000 per month. 16. The proprietor withdraws R12000 cash every month for his household expenses. 17. Salaries will remain unchanged during the budget period