Use the following information which relates to ABC Limited to answer the questions which follow: Information: 1. Cash at bank on 1 January 2022 amounted to R100 000. 2. Projected sales for the first four months of 2022: January R200 000 February R400 000 March R700 000 April R800 000 Fifty per cent (50%) of the sales are for cash and fifty per cent (50%) are on credit. Cash customers are entitled to a 5% cash discount. 3. Collection of credit sales: 90% of the credit sales are collected in the following month of the sale and the balance is written off as a bad debt. 4. Purchases for the first four months of 2022 are expected to be as follows: January R200 000 February R100 000 March R150 000 April R180 000 All purchases are on credit. 50% of the purchases will be paid for in the month of purchase and the remaining 50% in the following month. 5. Fixed overheads total R300 000 per year and are paid for equally each month. 6. Administrative expenses are paid for in the month in which they are incurred and are estimated at a total of R10 000 per month 7. An investment of R300 000 matures on 28 February 2022, and interest of R10 000 will also be received on this date. Required: Prepare the Cash Budget for the first four months of 2022.
Use the following information which relates to ABC Limited to answer the questions which follow: Information: 1. Cash at bank on 1 January 2022 amounted to R100 000. 2. Projected sales for the first four months of 2022: January R200 000 February R400 000 March R700 000 April R800 000 Fifty per cent (50%) of the sales are for cash and fifty per cent (50%) are on credit. Cash customers are entitled to a 5% cash discount. 3. Collection of credit sales: 90% of the credit sales are collected in the following month of the sale and the balance is written off as a bad debt. 4. Purchases for the first four months of 2022 are expected to be as follows: January R200 000 February R100 000 March R150 000 April R180 000 All purchases are on credit. 50% of the purchases will be paid for in the month of purchase and the remaining 50% in the following month. 5. Fixed overheads total R300 000 per year and are paid for equally each month. 6. Administrative expenses are paid for in the month in which they are incurred and are estimated at a total of R10 000 per month 7. An investment of R300 000 matures on 28 February 2022, and interest of R10 000 will also be received on this date. Required: Prepare the Cash Budget for the first four months of 2022.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
Please provide answer in text (Without image)
Transcribed Image Text:Use the following information which relates to ABC Limited to answer the questions which follow:
Information:
1. Cash at bank on 1 January 2022 amounted to R100 000.
2. Projected sales for the first four months of 2022:
January R200 000
February R400 000
March R700 000
April R800 000
Fifty per cent (50%) of the sales are for cash and fifty per cent (50%) are on credit. Cash customers are
entitled to a 5% cash discount.
3. Collection of credit sales:
90% of the credit sales are collected in the following month of the sale and the balance is written off as
a bad debt.
4. Purchases for the first four months of 2022 are expected to be as follows:
January R200 000
February R100 000
March R150 000
April R180 000
All purchases are on credit. 50% of the purchases will be paid for in the month of purchase and the
remaining 50% in the following month.
5. Fixed overheads total R300 000 per year and are paid for equally each month.
6. Administrative expenses are paid for in the month in which they are incurred and are estimated at a total
of R10 000 per month
7. An investment of R300 000 matures on 28 February 2022, and interest of R10 000 will also be received
on this date.
Required:
Prepare the Cash Budget for the first four months of 2022.
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 3 steps
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education