You are provided with a cash budget of Mbatha Ltd for January 2021.The financial year-end is 28th February 2021 show all calculations.

ADDITIONAL INFORMATION:

1.Total sales for the budget is expected as follows: -Jan: 324000 -Feb: 346000 -March: 360000 -April: 480000 -May: 330000 -June: ?

2. Cash sales are expected to be 40% of total sales for the entire budget period.

3. Debtors are expected to pay as follows: -50% pay in the same month as the sales transaction (less 5% discount) -30% pay in the month after the sales transaction month -15% pay in the second month after the sales transaction month. -5% are expected to be bad debts and are written off in the third month after the transaction

4. The current markup is 60% on cost.

5. A fixed base stock of raw materials is kept at all times. All the raw materials are bought on credit. Creditors are paid in the month following the purchase of stock (I.e. within 30 days) to earn a 10% discount.

6. At the end of the financial year ended 28 February 2021, the return on total Capital Employed was 5%.

7.Cash budget for the six period January to July 2021 provided in photo:

QUESTIONS: 1.Debtors collection schedule,complete the missing amounts

2. Calculate the amounts for payments to creditors labelled A to C on the cash budget,show all calculations.

3. Consider the loan and interest payable on the loan: -Calculate the amounts labelled D and E showing the repayments of the loan. -Calculate the amount owed on the loan at the end of June -Identify one reason,quoting relevant amounts,to explain why this business made such a concerted effor to reduce their loans.

4. Consider the shares and dividends: -Calculate the number of new shares that will be issued in January 2021. -One of the current shareholder has requested that the business repurchase his shares in April 2021. The business has agreed to this request. Show how this repurchase will be treated by the business (accounts dr and cr) -Calculate the amount that is budgeted for Interim Dividends (labelled F)

M Mbatha LTD Name Cash Budget for the six period January to June 2021 May June April Receipts March Feb Jan 148 800 132 000 192 000 Cash sales 129 600 144 000 138 400 7 7 Collection from debtors 2 188 700 194 370 0 0 0 Issue of shares 0 0 1 300 000 0 80 000 0 Sale of Factory Equip 0 0 0 ? ? Total Receipts 1 618 300 332 770 ? ? PAYMENTS Payments to creditors 201 563 185 625 182 250 A B Salary of Factory Manager 20 000 20 000 20 000 20 000 20 800 20 800 Wages for 20 Direct Labourers 150 000 150 000 150 000 150 000 161 250 161 250 Directors Fees 66 000 66 000 66 000 66 000 66 000 66 000 Interest on loan (8% p.a.) 5 600 5 600 4 200 4 200 4 200 2 700 Repayment of loan 0 0 D 0 0 E Repurchase of Shares 0 o o ? o 0 0 F Interim dividends paid 0 0 0 0 0 F Maintenance of Factory quip 12 000 12 000 12 000 12 000 2 000 2 000 Electricity (80% for factory) 8 000 8 000 8 000 8 000 6 500 6 500 0 0 0 O 150 000 0 Deposit on new Factory Equip Instalments on new factory Equip (incl finance charges) 0 0 0 0 0 16 000 Independent auditors fees 0 0 0 60 000 0 0 Total Dumonte 2 2 Instalments on new factory Equip (incl finance charges) 0 0 0 0 0 16 000 Independent auditors fees 0 0 o 60 000 0 0 Total Payments ? ? ? ? ? ? Cash Surplus / Deficit ? ? ? 2 ? Cash Balance at the beginning of the period ? ? 2 ? ? ? ? Cash Balance at the end of the period ? ? ? ? ? ? Credit Sales Jan Feb March April May June October 175 000 November 180 000 27 000 December 215 000 64 500 32 250 January 194 400 92 340 58 320 29 160 February 207 600 98 610 62 280 31 140 March 216 000 102600 64800 * April 86400 43200 May 198000 59400 June 223200 * 183840 189180 194040