Reference no: EM132568443
The following figures are available:
Actual (2020) Estimated (2020)
March April May June July
R R R R R
Sales 96 000 120 000 60 000 160 000 200 000
Purchases 100 000 50 000 160 000 84 000 60 000
Sales commission 400 600 1 200 800 400
Wages 800 800 800 ? ?
• 40% of all sales are for cash.
• 35% of all purchases are for cash.
Collections for credit sales are as follows:
• 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.
2. Xavi Limited will make an investment of R50 000 in fixed deposit on 01 June 2020. Interest of R500 per month is expected to be received from 30 June 2020.
3.Creditors are paid 2 months after the date of invoice.
4.Rent expense amounts to R8 000 per month and is payable on the first day of each month.
5.Wages will be increased by 10% in June 2020 and will increase by a further 5% in July 2020.
6.A new machine is expected to be purchased for R10 000 cash in July 2020.
7.Commission is paid to sales personnel in the month following the month in which it was earned.
8.On 31 May 2020 Xavi Limited had a bank overdraft of R28 000.
Required
Use the information provided below to:
Question 1: Draw up a Debtors collection schedule for June and July 2020.
Question 2: Prepare the Cash budget for June and July 2020.