Prepare the Cash Budget for a project of Pisces Limited for the period 01 June 2021...

 

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Prepare the Cash Budget for a project of Pisces Limited for the period 01 June 2021 to 31 August 2021. (Note: Provide separate monetary columns for each month.) INFORMATION The financial manager of Pisces Limited supplied the following information for its project: 1. An unfavourable bank balance of R30 000 is expected on 31 May 2021. The expected monthly sales are as follows: 2. Units 6 000 6 500 5 400 6 700 May June July August September 6 900 The selling price is R220 per unit. 3. Cash sales make up 40% of the total sales and a 10% cash discount is granted to wholesalers who contribute towards 20% of the cash sales. The balance of the sales is on credit. Debtors pay in the month after the sale. 4. Pisces Limited maintains 20% of the following month's sales in inventory at the end of each month in order to avoid the risk of running out of stock. (Hint: Calculate the number of units that should be produced each month.) 5. The expected materials purchase price is R45 per unit and the payment terms are "cash on delivery". Variable manufacturing overheads are budgeted at R40 per unit and are paid for in the month in 6. which they are incurred. 7. Labour costs amount to R32 per unit and are payable monthly. Fixed manufacturing, selling and administrative overheads are budgeted at R90 000 per month including R10 000 for depreciation. Fixed overheads are payable in the month in which they are incurred. 8. 9. Sales commission amounts to 10% of the monthly sales value (excluding discounts). Payment is delayed by one month. 10. A new motor vehicle with a cost price of R300 000 is to be purchased on 01 August 2021 to replace the old vehicle. A deposit of 20% of the purchase price will be paid on 01 August 2021 and the balance plus finance charges of R91 200 will be paid in 36 monthly instalments commencing August 2021. The old vehicle, with a cost price of R100 000 and accumulated depreciation of R80 000, is expected to be sold for cash during August at a profit of R5 000. Prepare the Cash Budget for a project of Pisces Limited for the period 01 June 2021 to 31 August 2021. (Note: Provide separate monetary columns for each month.) INFORMATION The financial manager of Pisces Limited supplied the following information for its project: 1. An unfavourable bank balance of R30 000 is expected on 31 May 2021. The expected monthly sales are as follows: 2. Units 6 000 6 500 5 400 6 700 May June July August September 6 900 The selling price is R220 per unit. 3. Cash sales make up 40% of the total sales and a 10% cash discount is granted to wholesalers who contribute towards 20% of the cash sales. The balance of the sales is on credit. Debtors pay in the month after the sale. 4. Pisces Limited maintains 20% of the following month's sales in inventory at the end of each month in order to avoid the risk of running out of stock. (Hint: Calculate the number of units that should be produced each month.) 5. The expected materials purchase price is R45 per unit and the payment terms are "cash on delivery". Variable manufacturing overheads are budgeted at R40 per unit and are paid for in the month in 6. which they are incurred. 7. Labour costs amount to R32 per unit and are payable monthly. Fixed manufacturing, selling and administrative overheads are budgeted at R90 000 per month including R10 000 for depreciation. Fixed overheads are payable in the month in which they are incurred. 8. 9. Sales commission amounts to 10% of the monthly sales value (excluding discounts). Payment is delayed by one month. 10. A new motor vehicle with a cost price of R300 000 is to be purchased on 01 August 2021 to replace the old vehicle. A deposit of 20% of the purchase price will be paid on 01 August 2021 and the balance plus finance charges of R91 200 will be paid in 36 monthly instalments commencing August 2021. The old vehicle, with a cost price of R100 000 and accumulated depreciation of R80 000, is expected to be sold for cash during August at a profit of R5 000.

Answer rating: 100% (QA)

Cash Budget of Pisces Limited Particulars June R July R August R Opening balance 30000 462040 33740 Cash inflows Cash sales after discount 560560 465696 577808 Receivables collected 858000 712800 Sale ... View the full answer