Question

Glass CC is a supplier of glass containers and has the following sales budget for the coming year: Month Sales Value (Rands) January 300 000 February 315 000 March 345 000 April 367 500 The sales price per unit is R15; the cost of sales is 60% of sales. Glass CC keeps inventory equal to the coming month's budgeted sales requirements. It pays for purchases 55% in the month of purchase and 45% in the month after purchase. Inventory at the beginning of January is R172,800. Accounts Payable on 1 January is R83,000. Required a. Prepare a purchases budget, in units and in rands, for the first three months of the year (8) b. Prepare a schedule of cash disbursements on account for the first three months of the year. (6) c. Determine the accounts payable balance as of 31 March. (2) Glass CC is a supplier of glass containers and has the following sales budget for the coming year:Month Sales Value (Rands) January 300 000 February 315 000 March 345 000 April 367 500 The sales price per unit is R15; the cost of sales is 60% of sales.

Answer 1

Selling Price = 15 per unit

Purchase Price = 9 (60% of 15) per unit

	January	Feb	March	April
Sales	3,00,000	3,15,000	3,45,000	3,67,500
Cost of Sales (60% of Sales)	1,80,000	1,89,000	2,07,000	2,20,500
Closing Inventory (Cost of Sales of Next Month)	1,89,000	2,07,000	2,20,500	Data not available
Opening Inventory	1,72,800	1,89,000	2,07,000	2,20,500
Purchase (Cost of Sales+Closing Inventory-Opening Inventory)	1,96,200	2,07,000	2,20,500	Data not available
Purchase (Units) @ Rand 9 per unit	21,800	23,000	24,500

Cash Disbursement:

	January	Feb	March
- Last month purchase payment (45%)	83,000	88,290	93,150
- Current month purchase payment (55%)	1,07,910	1,13,850	1,21,275
Total Cash Disbursement	1,90,910	2,02,140	2,14,425

Account Payable Balance as of 31st March = 45% of March Purchase = 45% of 220,500 = 99,225