Question
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
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 income from the past year (2021) and adjusted them for the expected growth in the coming year already and 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 made 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 The cash balance at the start of January is R0. 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 then to find the financing requirement for each month using the net cash flows and the credit collections. Structure your answer as follows: Month Credit collection Financing requirement January: R xxx R xxx February: R xxx R xxx March: R xxx R xxx April:: R xxx R xxx May: R xxx R xxx June: R xxx R xxx ONLY provide your answers formatted in a table as above for question 5, calculations for question 5 will not be marked.
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