Question: The following information pertains to Ace Traders for the three months ended 31 May 2007.
|
|
Actual March
|
Budgeted
|
|
April
|
May
|
|
|
R
|
R
|
R
|
|
Sales (20% for cash and 80% on credit)
|
360 000
|
380 000
|
400 000
|
|
Purchases (10% for cash and 90% on credit)
|
240 000
|
280 000
|
320 000
|
|
Salaries and Wages Paid
|
40 000
|
60 000
|
60 000
|
|
Cash Expenses
|
24 000
|
28 000
|
32 000
|
|
Depreciation
|
2 000
|
2 000
|
2 000
|
Additional Information:
1. It is expected that debtors will settle their accounts as follows:
- 20% in the month of sale
- 70% in the month after the month of sale, and
- 5% in the second month after the month of sale.
1. The remaining 5% is usually written off as bad debts.
2. Trade creditors are paid in the month after the purchases at a discount of 5%.
3. 50% of the salaries and wages are weekly wages. Because wages are paid weekly, usually 10% of the wages are paid in the month following the month in which they were incurred.
4. Expenses are paid as they arise.
5. The favourable bank balance on 1 April was R14 800.
REQUIRED: Prepare the Cash Budget of Ace Traders for April and May 2007.