Answer to Question #127427 in Accounting for Letlhogonolo

Question

The following is the budgeted information of Louw Traders:
BUDGET
2020
Total Sales R
March 900 000
April 1 050 000
May 1 140 000
June 1 200 000
Collections:
40% of sales are cash sales while 35% is collected one month after the sale and the remaining 25%
is collected two months after the sale has taken place.
Expenses:
The expenses are expected to be maintained at 55% of the same month’s sales.
Payments:
75% of expenses are paid in cash and 25% are paid one (1) month after incurring the expense.
Opening cash balance:
The business opening May cash balance is R30 000
Minimum cash balance requirement:
The business requires a minimum cash balance of R15 000.
Required:
Q.6.1 Prepare the cash budget of Louw Tradersfor the months of May and June 2020. (25)

Answer 1

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