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Simba Limited supplies components for cell phones. Information The following details are available: Actual 2020 Estimated 2020 July August September October November Sales 96000 120000

Simba Limited supplies components for cell phones. Information The following details are available:

Actual 2020

Estimated 2020

July

August

September

October

November

Sales

96000

120000

60000

160000

200000

Purchases

100000

50000

160000

84000

60000

Sales Commission

780

320

1600

900

560

Wages

1000

1000

1000

?

?

40% of all sales are for cash

30% of all purchases are cash

  1. Collections for credit sales are as follows:

20% is collected in the month of the sale and 2% discount is granted on these collections.

60% is collected in the first month following of sale

15% is collected in the second month following the month of sale

The remaining 5% is written off as bad debts

2. Creditors are paid 2 months after the date of invoice

3. Simba Limited will make an investment of R80 000 in fixed deposit on 1 October 2020. Interest of 15% per month is expected to be received from 31 October 2020

4. Rent expense amounts R6 800 per month and is payable on the first day of each month

5. Wages will be increased by 9% in October 2020 and will increase by a further 10% in November 2020

6. A new machine is expected to be purchase for R22 100 cash in November 2020

7. Commission is paid to sales personnel in the month following the month in which it was earned.

8. On 30 September 2020 Simba Limited had a bank overdraft of R7 000.

Required:

3.1 Debtors collection schedule (6 marks)

3.2 Cash Budget for October and November 2020 (14 marks)

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