FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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BTB (Pty) Limited is a distributor of PPE to rural health clinics in KZN. Turnover has been good and running expenses are under control, however the owner of the business, Mr Sam Jonas, is concerned that upcoming legal expenses and necessary vehicle repairs may negatively affect the business’
All sales are made on credit and collected as follows:
• 40% in the month of the sale;
• 35% in the month after the sale;
• 15% in the second month after the sale;
• 10% will be written off as
All purchases are made on credit and paid for as follows:
• 60% in the month of the purchase and
• 40% in the month after the purchase.
Total administration expenses (rent, rates stationary etc) will be R14 000 per month. The legal costs will be R34 000 in each of July and August 2022. Major repairs and maintenance to vehicles will cost R45 000 and this amount will be paid in three equal instalments from August to October 2022. Cash on hand on 1st July 2022 is expected to be zero, however the company has agreed to maintain a minimum cash balance of R28 000 at all times with immediate effect.
Actual sales were R180 000 for May and R130 000 for June 2022. The estimated sales are R140 000 for July, R120 000 for August, R100 000 for September and R110 000 for October. Purchases for June 2022 were R75 000. The estimated purchases are R80 000 for July, R65 000 for August, R40 000 for September and R50 000 for October.
Required:
(e) Determine the cumulative cash balance at the end of October
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