Reference no: EM132528565
REQUIRED
Prepare the Cash Budget for a project of Gillette Enterprises for the period 01 May 2016 to 31 July 2016. (Ensure that your cash budget has a separate monetary column for each month.)
INFORMATION
The following information is available for Gillette Enterprises:
1. The bank account in the general ledger as at 30 April 2016 is expected to be R60 000.
2. Expected sales at R25 per unit (excluding discounts) are as follows:
April May June July
(units) (units) (units) (units)
Cash sales 4 000 6 000 5 000 7 000
Credit sales 7 000 6 000 7 000 9 000
1. A discount of 10% is given to customers on cash sales.
2. Approximately 2% of the credit sales each month are written off as bad debts. The remaining customers usually pay one month after the sale.
3. The production estimates reveal the following:
March April May June July
R R R R R
PRODUCTION COSTS:
Direct Material 44 000 40 00 38 000 38 000 52 000
Direct Labour 30 000 30 000 26 000 26 000 30 000
Overheads 23 000 22 000 20 000 21 000 24 000
6. All the direct materials are purchased on credit and creditors are usually paid two months after the purchase.
7. Employees involved in the production of finished goods are paid monthly.
8. The payment of production overheads is delayed by one month.
9. Selling and administrative costs are paid for in the month in which they are incurred. They are forecast at R20 000 for May 2016 and are expected to increase by 5% each month thereafter.