FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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Transcribed Image Text:Question-4
REQUIRED
Use the information provided by Empire Traders to prepare the following for March and
April 2024:
4.1 Debtors Collection Schedule
4.2 Cash Budget.
INFORMATION
The following information was provided by Empire Traders:
1. Empire Traders expects to have a favourable bank balance of R60 000 on 28 February 2024.
2. Budgeted sales figures for 2024 are as follows:
3.
4.
5.
6.
7.
Cash sales
Credit sales
9.
January
R320 000
R370 000
Total purchases
February
R370 000
R390 000
March
R310 000
R320 000
Thirty percent (30%) of the cash sales is to informal traders who are entitled to a discount of 10%.
Collections from debtors are usually as follows:
• 80% is collected in the month after the sale.
20% is collected two months after the sale.
Purchases of inventory are expected to be as follows:
January
February
R410 000
R460 000
April
R250 000
R300 000
March
R400 000
April
R380 000
Sixty percent (60%) of the purchases is for cash to take advantage of a discount of 15%. The balance is
purchased on credit. Creditors are paid two months after the month of purchase. (Separate entries for
cash and credit payments are required.)
The proprietor's monthly drawings comprise R12 000 inventory and R10 000 cash.
The monthly salaries are expected to amount to R194 400 for April 2024 after an increase of 8% takes
effect on 01 April 2024.
8.
A fixed deposit, R100 000, will mature (expire) on 31 March 2024. Interest at 12% per annum for three
months will also be received.
Equipment with a cost price R160 000 will be purchased on 31 March 2024. A deposit 25% will be paid
on this date. The balance will be paid in four equal monthly instalments commencing 30 April 2024.
10. Other cash operating expenses are expected to amount to R160 000 for February 2024 and are expected
to increase by 5% each month thereafter.
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