Reference no: EM132706666

Question - The following information is applicable to Shine Wholesalers:

Budgeted sales

July R105 000

August R132 000

September R165 000

Cash sales amount to 20% of total sales.

55% of credit sales are collected in the month of sale, with a discount of 10% those debtors who pay during this time. The remaining outstanding credit sales are collected in equal instalments over next two months. In October, the sales are expected to increase by 20% when compared to September. There are no bad debts.

Purchases of raw materials and sales in October will be at the same ratio as in September. Shine Wholesalers is allowed two month's credit on purchases of raw materials. 40% of purchases are paid in the month following purchase and the rest in the second month after purchase.

Purchases of raw materials are expected to as follows:

June R55 000

July R68 000

August R85 000

September R105 000

Wages and salaries are paid to employees at the end of the month in which they were earned. Salaries and wages are expected to be:

June R22 200

July R20 500

August R23 500

September R26 500

October R28 000

Rent amounts to R48 000 per annum. All other overheads amount to R38 160 per annum, which includes R1 875 depreciation on equipment, bought on 1 July 20x20 for R75 000. This amount is expected to be paid off in three equal monthly instalments, commencing on 1 August 20x20. Rental expenses and overheads expenses are expected to accrue evenly throughout the financial year.

Overdraft facilities are available. The opening bank balance on 1 September 20x20 amounted to R16 800 (favourable).

Required - Prepare a columnar cash budget for September and October 20x20. Show all calculations. Round off to the nearest rand.