Question
The following information has been provided for Bay Watch (Pty) Ltd. Actual Forecasted March April May June July R R R R R Sales (40%
The following information has been provided for Bay Watch (Pty) Ltd.
Actual
Forecasted
March
April
May
June
July
R
R
R
R
R
Sales (40% cash,60% credit)
264 000
316 400
356 600
352 000
368 000
Purchases
238 160
274 280
280 320
276 000
284 000
Salaries
26 320
26 320
?
? ? Distribution cost
13 200
15 820
17 830
17 600
18 400
Other operating expenses
7 480
7 760
10 160
8 200
8 600
Credit losses
7 920
9 492
10 698
10 560
11 040
Additional information:
a) Cash in respect of credit sales is collected as follows:
- 60% in the month of the sale
- 25% in the month following the sale
- 10% in the second month following the sale
- 5% is uncollectable.
b) 70% of all purchases are on credit and are paid during the month that follows that of the transaction.
c) All salaries, distribution and other operating expenses are paid in cash in the month that they are incurred.
d) In May, all employees receive their annual increase of 5%.
e) Other operating expenses include depreciation of R3 000 per month.
f) A 30-day loan of R40 000 was obtained from FNB bank in June 2023 to be repaid in July 2023, R2 000 interest will be capitalised onto the loan and payable upon settlement of the loan.
g) The cash in the bank on 1 June was R20 800.
REQUIRED
Prepare the cash budget for the months of June and July 2023
The following information has been provided for Bay Watch (Pty) Ltd.
| Actual | Forecasted | |||
| March | April | May | June | July |
R | R | R | R | R | |
Sales (40% cash,60% credit) | 264 000 | 316 400 | 356 600 | 352 000 | 368 000 |
Purchases | 238 160 | 274 280 | 280 320 | 276 000 | 284 000 |
Salaries | 26 320 | 26 320 | ? | ? | ? |
Distribution cost | 13 200 | 15 820 | 17 830 | 17 600 | 18 400 |
Other operating expenses | 7 480 | 7 760 | 10 160 | 8 200 | 8 600 |
Credit losses | 7 920 | 9 492 | 10 698 | 10 560 | 11 040 |
Additional information:
a) Cash in respect of credit sales is collected as follows:
- 60% in the month of the sale
- 25% in the month following the sale
- 10% in the second month following the sale
- 5% is uncollectable.
b) 70% of all purchases are on credit and are paid during the month that follows that of the transaction.
c) All salaries, distribution and other operating expenses are paid in cash in the month that they are incurred.
d) In May, all employees receive their annual increase of 5%.
e) Other operating expenses include depreciation of R3 000 per month.
f) A 30-day loan of R40 000 was obtained from FNB bank in June 2023 to be repaid in July 2023, R2 000 interest will be capitalised onto the loan and payable upon settlement of the loan.
g) The cash in the bank on 1 June was R20 800.
REQUIRED
Prepare the cash budget for the months of June and July 2023
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