Reference no: EM132589580

1. Salaries and wages are R124 000 a month and staff are given a bonus in December each year of 70% of their monthly salary or wage. Echo Enterprises gives all employees a 10% salary increase from January each year.

2. Echo Enterprises pay R40 000 to Invest Bond on the bond over their factory on the first day of every month.

3. Echo Enterprises let out a section of their factory to a small manufacturing entity at R8 000 a month.

4. Echo Enterprises were concerned that they would not have sufficient liquidity at the end of December 2017 to pay their staff their December Bonuses, so the Director agreed to lend the entity R90 000 on 30 November 2017, which will be repaid plus interest in five equal monthly instalments of R19 080 each, commencing on 31 January 2018.

5. Monthly petty cash payments are estimated to be R2 200.

6. Echo Enterprises have sixty days to pay on all their purchases, which they utilize.

7. Their debtor's history shows that 50% of their debtors pay in the month following purchase, 30% pay in the second month following purchase, and 15% pay in the third month following purchase, with the balance considered to be irrecoverable.

8. They anticipate that their opening bank balance on 1 January 2018 will be R48 400.

REQUIRED

Question 1: Prepare the cash budget for Echo Enterprises for the months of January and February 2018, showing the receivables collection schedule separately.

Echo Enterprises have asked you to prepare their cash budget for the first two months of 2018, and have provided you with the following information:

ACTUAL SALES (40% CASH) SEPTEMBER 2017 R480000 , OCTOBER 2017 R440000 ...

ESTIMATED SALES (40% CASH) NOVERMBER 2017 R460000, DECEMBER 2017 R500000 , JANUARY 2018 R4800000 , FEBRUARY 2018 R500000.....

ACTUAL CREDIT PURCHASE SEPTEMBER 2017 R288000 ,OCTOBER 2017 R269000 ,ESTIMATED CREDIT PURCHASES NOVEMBER 2017 R270000, DECEMBER 2017 R180000 , JANUARY 2018 R220000 , FEBRUARY 2018 R220000