The following is a summary of Gridrod Lid's expected transactions for June to September 2020. June July AUFUSE September A R R R sales 220 000 180 000 150 000 120 000 Commission received 45 000 9 35 000 : 20 000 ....... Inventory purchases 54 000 48 000 36 000 30 00O SafeM > saveleS 84 000 b6 000 60 000 48 00O Monthly rent 1 200 1 200 1 200 ....... 1 200 :......... Bad debts written off 1 800 1 000 3 600 3 520 General operating expenses 24 000 22 000 24 000 20 000 Repayment of loan 10 000 10 000 Additional information: i) On 1 September 2020 the firm expects to have a bank overdraft of R19 200. (ii) Interest on an investment of R60 000 invested in a fixed deposit for a period of two years at 15 % per annum is paid every six months in March and September. (iii) All of the sales are on a credit basis and the firm collects cash from its credit customers as follows: 40 % in the month of sale 35 % in the second month in the third month Bad debts are negligible (iv) 40 % of inventory is purchased on a cash basis while the remainder is paid for one month after purchase. In addition to the company has a standing contract with a transport company to deliver inventory to its warehouse. According to the contract, Gridgod Led must make minimum monthly cash payments of R4 500 to the transport company. (v) Included in general operating expenses is depreciation expense of R6 000.AutoSave OFF A A ?. CG ... 2022 FTX1005S Master Tutorial pack - Compatibility Mode Q~ bud Home Insert Draw Design Layout References Mailings Review View Zotero @ Tell me Share Comments Calibri 11 AA Aa v E FE AL IT AaBbCcDd AaBbCcDd AaBbCcDd AaBbCcDd AaBbCcDdEe Paste 3IUvab Av LA v Caption Heading 1 Heading 2 Heading 3 Heading 4 Styles Dictate Editor Pane (iv) 40 % of inventory is purchased on a cash basis while the remainder is paid for one month after purchase. In addition to the company has a standing contract with a transport company to deliver inventory to its warehouse. According to the contract, Gridrod Led must make minimum monthly cash payments of R4 500 to the transport company. (v) Included in general operating expenses is depreciation expense of R6 000. YOU ARE REQUIRED TO: 1. List any three (3) factors that must be considered when preparing a Sales budget.| (3 marks) 2. Prepare a detailed Cash budget for September 2020. (13 marks) 3. Why is it advantageous for a business to prepare a Cash budget. (2 marks] Page 154 of 182 France (FTX 1035s) Tutorial pack- 2022 Question 5 Check answers .Theory F..... 2. Cash receipts R170 000 Interest received R4 500 cash payments R111 300 General operating expenses R14 000 Page 134 of 182 45766 words [ Accessibility: Unavailable Focus E E + 99%AutoSave OFF A A ?. CG ... 2022 FTX1005S Master Tutorial pack - Compatibility Mode Q~ bud Home Insert Draw Design Layout References Mailings Review View Zotero . Tell me Share Comments Calibri 11 AA Aa v Ap FE AL AaBbCcDd AaBbCcDd AaBbCcDd AaBbCcDd AaBbCcDdEe Paste 3IUvab Av LVAv BEEE Caption Heading 1 Heading 2 Heading 3 Heading 4 Styles Dictate Editor Pane QUESTION 6 (19 MARKS : 23 MINUTES) Source: Managerial Finance (FTX1005F) - 2014 Class test 2 Q5 Bailey Traders has been experiencing cash flow problems and has decided to prepare cash budgets so that it may anticipate cash surplus and cash shortages so that it can make timeous arrangements with the banks. The following information for the following months has been estimated: On 1 August 2021 the firm expects to have a favourable current bank account balance of R120 000. The firm adopted a cash management policy that the current bank account should have a minimum favourable balance of R100 000 at the end of each month . Cash and credit sales May 2021 June 2021 July 2021 August 2021 September 2021 Cash sales R300 000 R200 000 1300 000 R250 000 1450 00 (before trade discount) Credit sales R200 000 R600 000 R400 000 R300 000 R800 000 Total sales R500 000 R800 000 R700 000 R550 000 R1 250 000 "The firm decided that as from 1 July 2021 that 10 % trade discount will be given to all cash customers. Debtors (that is cash collected from credit sales) usually settle their accounts in the following pattern: 75 % in the month after credit sales 20 % two months after credit soles The balance is regarded as irrecoverable 2. Purchases of inventory equals 60 % of the total monthly sales value (before trade discount). All purchases are on credit are paid by cheque in the following month 3. Salaries and wages are R60 000 per month and is expected to increase by 10 % in August 2020. Administration and other operating expenses are R150 000 per month and includes annual depreciation of R40 000 on office equipment 5. Equipment with a cost of R100 000 is expected to be purchased on 1 August 2021. A deposit of 15 % will be paid on 2 August 2021. The balance plus finance charges and other administration costs of R10 000 will be paid in 10 equal instalments starting on 31 August 2021. It is expected that cash receipts will be in excess of cash payments requirements during August 2021. 20 %% of August 2021 cash sales (before trade discount) must be invested on 31 August 2021 in a fixed deposit investment at PDM Bank. The investment will earn interest of 10 % per annum which will be paid together with the fixed deposit at maturity on February 2022. YOU ARE REQUIRED TO: Page 136 of 182 45766 words [ Accessibility: Unavailable Focus E + 94%YOU ARE REQUIRED TO: 1. Name and briefly discuss the two most important purposes (goals) of budgeting. (maximum 40 words) (3 marks) 2. Prepare the Cash budget of Bailey Traders ONLY for August 2021. Mark will be awarded for presentation (16 marks]