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The following figures are available for Insure (Pty) Ltd: Actual (2018) Budget (2018) January February March April May Sales 96 000 120 000 60 000
The following figures are available for Insure (Pty) Ltd:
| Actual (2018) | Budget (2018) | |||
| January | February | March | April | May |
Sales | 96 000 | 120 000 | 60 000 | 160 000 | 200 000 |
Purchases | 100 000 | 50 000 | 160 000 | 84 000 | 60 000 |
Sales commission | 400 | 600 | 1 200 | 800 | 400 |
Wages | 800 | 800 | 800 | ? | ? |
- 40% of all sales are for cash.
- 35% of all purchases are for cash.
- Collection from debtors 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 month following the month of sale. 15% is collected in the second month following the month of sale. The remaining 5% is written off as a bad debt.
- Insure (Pty) Ltd will make an investment of R50 000 in fixed deposit on 01 April 2018.
- Interest of R500 per month on the fixed deposit is expected to be received from 30 April 2018.
- Creditors are paid 2 months after date of invoice.
- Rent expense amounts to R8 000 per month and is payable on the first day of each month.
- Wages will be increased by 10% in April and will increase by a further 5% in May 2018.
- A new machine is expected to be purchased for R10 000 cash in May 2018.
- Commission is paid to sales personnel in the month following the month in which it was earned.
- On 31 March 2018, Insure (Pty) Ltd had a bank overdraft of R28 000. Required:
Prepare the debtors collection schedule for April and May 2018. (10)
Prepare the cash budget for April and May 2018. (20)
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