Reference no: EM132904841

Question - REQUIRED - Use the following information provided by ABC Limited to:

1. Prepare a Debtors Collection Schedule for March and April 2020.

2. Prepare the Cash Budget for March and April 2020.

Note: Where applicable, round off all amounts to the nearest Rand.

INFORMATION -

1. ABC Limited expects to have a favourable bank balance of R154 000 on 28 February 2020.

2. Total sales figures for 2019 and 2020 are as follows:

Actual (R)

December 2019 R410 000

January 2020 R260 000

February 2020 R 310 000

Budgeted (R)

March 2020 R320 000

April 2020 R280 000

3. 60% of sales are cash sales.

4. Debtors settle their accounts as follows:

50% one month after the sale

45% two months after the sale

5% is written off as bad debts

5. Total purchases of inventory for 2020 are as follows:

Total purchases (R)

January 160 000

February 180 000

March 175 000

April 220 000

6. 40% of the purchases are for cash. The balance is purchased on credit. Creditors are paid one month after the month of purchase.

7. Other cash operating expenses are expected to amount to R70 000 for February 2020 and are expected to increase by 10% from 1 March 2020.

8. Equipment costing R120 000 will be purchased on 01 March 2020 A deposit of R20 000 will be paid on this date. The balance will be paid in five equal monthly installments commencing 30 April 2020.

9. The proprietor plans to make the following drawings during March 2020:

Trading stock R12 000

Cash R15 000

10. A fixed deposit of R60 000 will be made on 1 April 2020. Interest at 8% per annum will be received monthly on this fixed deposit.

11. Property rates and taxes are paid monthly and amount to R2 000 per month. These are expected to increase by 10% with effect from 1 April 2020.

12. Monthly rent paid amounts to R40 000. Rentals are expected to increase by 10% per annum with effect from 1 April.

13. Monthly salaries amount to R22 000. Salaries will increase by 8% with effect from 01 April 2020.