morman 1. The following figures are available: Sales Purchases Sales commission Wages ● 40% of all sales are for cash. 35% of all purchases are for cash. Collections for credit sales are as follows: ● Actual (2020) January ● R 96 000 100 000 400 800 ● February R 120 000 50 000 600 800 March R 60 000 160 000 1700 800 Estimated (2020) May R 20% is collected in the month of the sale and a 2% discount is granted on these collections. 60% is collected in the month following the month of sale. 15% is collected in the second month following the month of sale. The remaining 5% is written off as bad debts. April R 160 000 84 000 800 ? 200 000 60 000 400 ? Plane Limited will make an investment of R30 000 in fixed deposit on 01 April 2020 Interest of R500 per month is expected to be received from 30 April 2020. Creditors are paid 2 months after the date of invoice. Rent expense amounts to R6 000 per month and is payable on the first day of each month. Wages will be increased by 10% in April 2020 and will increase by a further 5% in May 2020. A new machine is expected to be purchased for R25 000 cash in May 2020. Commission is paid to sales personnel in the month following the month in which it was earned. On 31 March 2020 Plane Limited had a debit bank balance of R11 000.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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prepare debtors collection schedule for April and May 2022

prepare the cash budget for April and May 2022

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### Financial Information for Plane Limited

**The following figures are available:**

| | Actual (2020) | | Estimated (2020) | |
|-----------|---------------------|---------------|---------------------|--------------|
| | January | February | March | April | May |
| **Sales** | R 96,000 | R 120,000 | R 60,000 | R 160,000 | R 200,000 |
| **Purchases** | R 100,000 | R 50,000 | R 70,000 | R 84,000 | R 60,000 |
| **Sales commission** | R 400 | R 600 | R 1,200 | R 800 | R 400 |
| **Wages** | R 800 | R 800 | R 800 | ? | ? |

**Key Financial Policies and Information:**

- **Sales and Purchases**:
- 40% of all sales are conducted on a cash basis.
- 35% of all purchases are made in cash.

- **Collections for Credit Sales**:
- 20% is collected in the month of the sale, and a 2% discount is granted on these collections.
- 60% is collected in the month following the month of the sale.
- 15% is collected in the second month following the month of the sale.
- The remaining 5% is written off as bad debts.

**Additional Financial Assumptions and Activities**:

- Plane Limited will make an investment of R30,000 in a fixed deposit on 01 April 2020. Interest of R500 per month is expected to be received from 30 April 2020.
- Creditors are paid 2 months after the date of the invoice.
- Rent expense amounts to R6,000 per month and is payable on the first day of each month.
- Wages will be increased by 10% in April 2020 and will increase by a further 5% in May 2020.
- A new machine is expected to be purchased for R25,000 cash in May 2020.
- Commission is paid to sales personnel in

Definition Definition Estimate of an organization's cash flow for a future period. A cash budget forecasts future cash receipts and payments from various sources for a fiscal year. A cash budget can be created once a month or once a week to determine the organization's cash position and ensure its performance in relation to the budget. It aids in determining whether the company has enough cash and cash equivalents to meet its operational needs in the future.

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