5M Ltd is a reseller of fan belts. The company is currently busy with its cash...

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5M Ltd is a reseller of fan belts. The company is currently busy with its cash planning for the next three months. The following information pertains to the income and expenditure activities of the company: At the start of October the company had a cash balance of R100 000. Sales for September amounted to R150 000. Sales for the next three months are projected as follows: October R200 000 November R100 000 Image transcription text October November December R200 000 R100 000 R250 000 December R250 000 All sales are on credit and half of credit sales are collected upon within the month of sale and the other half one month after the sales took place. Expenses for the coming three months (October to December) are expected to amount to R200 000 every month. Required: Compile a cash budget for 5M Ltd. for October, November and December and indicate if financing would be required in any given month. 6.2 Briefly compare the advantages and disadvantages of keeping stock in hand. 6.3 A supplier offers the following terms for making credit payments and possible discounts: 5/14 net 30 Calculate the cost of giving up the cash discount. 5M Ltd is a reseller of fan belts. The company is currently busy with its cash planning for the next three months. The following information pertains to the income and expenditure activities of the company: At the start of October the company had a cash balance of R100 000. Sales for September amounted to R150 000. Sales for the next three months are projected as follows: October R200 000 November R100 000 Image transcription text October November December R200 000 R100 000 R250 000 December R250 000 All sales are on credit and half of credit sales are collected upon within the month of sale and the other half one month after the sales took place. Expenses for the coming three months (October to December) are expected to amount to R200 000 every month. Required: Compile a cash budget for 5M Ltd. for October, November and December and indicate if financing would be required in any given month. 6.2 Briefly compare the advantages and disadvantages of keeping stock in hand. 6.3 A supplier offers the following terms for making credit payments and possible discounts: 5/14 net 30 Calculate the cost of giving up the cash discount.

Answer rating: 100% (QA)

To compile a cash budget for 5M Ltd for October November and December we need to consider the cash inflows and outflows during these months based on t... View the full answer