Question

REQUIRED

Use the following information provided by Ashleigh Enterprises to prepare the:

4.1 Debtors Collection Schedule for March and April 2021.

4.2 Cash Budget for March and April 2021. Note: * Where applicable, round off amounts to the nearest Rand.

* Use separate monetary columns for each month.

INFORMATION

1. The following are estimates for the first four months of 2021:

	January (R)	February (R)	March (R)	April (R)
Sales	140 000	120 000	190 000	230 000
Purchases	70 000	60 000	85 000	115 000
Wages	9 000	9 000	?	?

2. Forty percent (40%) of the sales are for cash and the balance is on credit. Collections for credit sales are as follows:

30% during the month of the sale;

65% in the month following the sale.

The remaining 5% is written off as bad debts.

1. All purchases are on credit. Creditors are paid two months after the month of purchase.
2. Ashleigh Enterprises will make an investment of R60 000 in fixed deposit on 01 March 2021. Interest of R400 per month is expected to be received from March 2021.
3. Rent expense amounts to R156 000 per year and is payable monthly.
4. Wages will be increased by 9% on 01 March 2021.
5. A new computer is expected to be purchased for R15 000 cash during April 2021.
6. Commission payable to sales personnel is calculated at 10% of sales and it is paid one month later.
7. The bank balance on 28 February 2021 is expected to be R30 000 (favourable).

Answer 1

4.1 Debtors Collection Schedule for March and April 2021. (4 marks)
	January (R)	February (R)	March (R)	April (R)
Sales	140,000.00	120,000.00	190,000.00	230,000.00
Cash Sales (40%)	56,000.00	48,000.00	76,000.00	92,000.00
Credit Sales (60%)	84,000.00	72,000.00	114,000.00	138,000.00
Debtors Collection Schedule for March and April 2021.
	March (R)	April (R)
Feb. Sales (65% x 72000)	46,800.00
March Sales	34,200.00	74,100.00
April Sales		41,400.00
Total cash collection from debtor	81,000.00	115,500.00
4.2 )Cash Budget for March  and April 2021
Cash Budget
For the period ending March  and April 2021	March	April
Beginning Balance	30,000.00	82,590.00
Receipts
Cash Sales	76,000.00	92,000.00
Collection From Credit Sales	81,000.00	115,500.00
Interest income	400.00	400.00
Total Cash Available	187,400.00	290,490.00
Less: Disbursement
Purchases	70,000.00	60,000.00
Wages	9,810.00	9,810.00
Rent	13,000.00	13,000.00
Computer Purchased		15,000.00
Commission Paid	12,000.00	19,000.00
Total Cash disbursement	104,810.00	116,810.00
Ending Cash	82,590.00	173,680.00