Whittle Ltd is preparing a cash budget for the first six months of the coming year, 2022.

The companys financial manager has pulled all the cash sales and other cash items from the past year (2021) and adjusted them for the expected growth in the coming year already, then calculated net cash flows for each month, except for collections from credit sales. The system however does not do credit collection estimates; however, an ageing report has been generated.

Credit sales over the last four months of 2021 were as follows:

September	October	November	December
R10 000	R12 000	R15 000	R45 000

Credit sales for the first 6 months of 2022 were estimated as follows:

January	February	March	April	May	June
R5 000	R10 000	R12 000	R14 000	R18 000	R25 000

The ageing analysis indicates that on credit sales, payments are usually received as follows for any given months sales:

The ageing analysis indicates that on credit sales, payments are usually received as follows for any given months sales:

1 month	2 months	3 months
50%	30%	20%

The net cash flows for the first six months of 2022 excluding the credit collections were estimated as follows:

January	February	March	April	May	June
-R10 000	-R20 000	R30 000	-R40 000	-R40 000	-R45 000

Required:

You have been tasked to assist the financial manager with calculating the credit collections for the first six months of 2022 using the past credit sales, estimated credit sales for 2022 and the aging report and to then find the financing requirement for each month, using the net cash flows and the credit collections.

Structure your answer as follows:

SOLUTION

Month	Credit collection	Financing requirement
January	R	R
February	R	R
March	R	R
April	R	R
May	R	R
June	R	R