Use the information given below to prepare the following for Altech Limited for July and August...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
Use the information given below to prepare the following for Altech Limited for July and August 2021: 1.1 Debtors Collection Schedule (4) (16) 1.2 Cash Budget Note: Provide separate monetary columns for each month. Where applicable, round off amounts to the nearest Rand. Information: Extract of Statement of Comprehensive Income for the month ended 30 June 2021 R Sales 200 000 Cost of sales 100 000 Rent income 8 000 Advertising Salaries and wages 4 000 10 000 Rates and taxes 1 200 Electricity Other operating expenses 3 000 9 000 Additional information: 1. The business uses a fixed mark-up of 100% on cost. 2. Sales are expected to increase by 10% each month. 3. Thirty percent (30%) of the sales are for cash and the balance is on credit. Collections from credit sales are as follows: • 40% in the month of the sale, and these customers are entitled to a 2% discount; • 55% one month after the sale. • The balance is usually written off as bad debts. 4. Closing Inventories are kept at a constant level. 50% of purchases are for cash. Creditors are paid one month after purchase. 5. In terms of the lease agreement, the rental income will increase by 10% per annum with effect from 01 July 2021. Rent is received monthly. 6. Advertising is paid monthly and is estimated to be the same percentage of sales as for June 2021. 7. Salaries and wages will increase by 10% with effect from 01 July 2021. 8. Rates and taxes will be paid in one instalment for the year during July 2021. Rates to be paid will amount to R6 000. 9. Other operating expenses are expected to increase by R500 every month. These expenses are paid for in the month in which they are incurred. 10. Electricity is expected to increase by 12% from 1 August 2021 due to tariff increases 11. The balance in the bank on 30 June 2021 is estimated to be R40 000 (favourable). QUESTION 2 (20) INFORMATION: Vista Limited intends purchasing a new machine and has a choice between the following two machines: Equipment A Equipment B Initial cost R220 000 R240 000 Expected useful life Scrap value Expected net cash inflows: 5 years 5 years Nil Nil R R End of: Year 1 55 000 70 000 Year 2 60 000 70 000 Year 3 62 000 70 000 Year 4 60 000 70 000 Year 5 70 000 70 000 The company estimates that its cost of capital is 12%. Required: 2.1 Calculate the Payback Period of both equipment. (Answers must be expressed in years, months and days). (4) 2.2 Calculate the Accounting Rate of Return (on initial investment) for both equipment A and B. (Answers must be expressed to 2 decimal places). (5) 2.3 Calculate the Net Present Value of each equipment. (Round off amounts to the nearest Rand.) (6) 2.4 Calculate the Internal Rate of Return of Equipment B. (5) Use the information given below to prepare the following for Altech Limited for July and August 2021: 1.1 Debtors Collection Schedule (4) (16) 1.2 Cash Budget Note: Provide separate monetary columns for each month. Where applicable, round off amounts to the nearest Rand. Information: Extract of Statement of Comprehensive Income for the month ended 30 June 2021 R Sales 200 000 Cost of sales 100 000 Rent income 8 000 Advertising Salaries and wages 4 000 10 000 Rates and taxes 1 200 Electricity Other operating expenses 3 000 9 000 Additional information: 1. The business uses a fixed mark-up of 100% on cost. 2. Sales are expected to increase by 10% each month. 3. Thirty percent (30%) of the sales are for cash and the balance is on credit. Collections from credit sales are as follows: • 40% in the month of the sale, and these customers are entitled to a 2% discount; • 55% one month after the sale. • The balance is usually written off as bad debts. 4. Closing Inventories are kept at a constant level. 50% of purchases are for cash. Creditors are paid one month after purchase. 5. In terms of the lease agreement, the rental income will increase by 10% per annum with effect from 01 July 2021. Rent is received monthly. 6. Advertising is paid monthly and is estimated to be the same percentage of sales as for June 2021. 7. Salaries and wages will increase by 10% with effect from 01 July 2021. 8. Rates and taxes will be paid in one instalment for the year during July 2021. Rates to be paid will amount to R6 000. 9. Other operating expenses are expected to increase by R500 every month. These expenses are paid for in the month in which they are incurred. 10. Electricity is expected to increase by 12% from 1 August 2021 due to tariff increases 11. The balance in the bank on 30 June 2021 is estimated to be R40 000 (favourable). QUESTION 2 (20) INFORMATION: Vista Limited intends purchasing a new machine and has a choice between the following two machines: Equipment A Equipment B Initial cost R220 000 R240 000 Expected useful life Scrap value Expected net cash inflows: 5 years 5 years Nil Nil R R End of: Year 1 55 000 70 000 Year 2 60 000 70 000 Year 3 62 000 70 000 Year 4 60 000 70 000 Year 5 70 000 70 000 The company estimates that its cost of capital is 12%. Required: 2.1 Calculate the Payback Period of both equipment. (Answers must be expressed in years, months and days). (4) 2.2 Calculate the Accounting Rate of Return (on initial investment) for both equipment A and B. (Answers must be expressed to 2 decimal places). (5) 2.3 Calculate the Net Present Value of each equipment. (Round off amounts to the nearest Rand.) (6) 2.4 Calculate the Internal Rate of Return of Equipment B. (5)
Expert Answer:
Answer rating: 100% (QA)
Question1 11 Debtors Collection Schedule July August Sales 220000 242000 Cash Sales 30 66000 72600 C... View the full answer
Posted Date:
Students also viewed these accounting questions
-
Pioneers International has just released its management forecasts for 2020 and 2021. Income Statement Revenues COGS Gross Profit G&A Expenses Depreciation Operating Profits Interest Expense EBT Taxes...
-
For each parabola described, use the information given to find the location of the missing feature. It may help to draw a sketch. a. If the focus is (1, 4), and the directrix is y = - 3, where is the...
-
Use the Western Environmental Inc. information given below to prepare a statement of cash flows for the year ended June 30, 2020, using the indirect method. a. A note is retired at carrying value. b....
-
Reisen Travel offers helicopter service from suburban towns to John F. Kennedy International Airport in New York City. Each of its 10 helicopters makes between 1,000 and 2,000 round-trips per year....
-
Indicate whether each of the following businesses would most likely be classified as a service company (S), merchandising company (Mer), or manufacturing company (Man). _____ 1. Merry Maids. _____ 2....
-
Graph the function. Graph should contain at least two periods. Use the graph to determine the domain and the range of function. TT y = 5 cot %3D 4
-
Which manager uses a transformational leadership style to motivate employees? A. Dick, who works daily to get the task done and gives to do lists to employees. B. Martin, who is known for seeing that...
-
The Ploughman family owns and operates a 640-acre farm that has been in the family for several generations. The Ploughmans always have had to work hard to make a decent living from the farm and have...
-
Carolina, the accountant for Duke Manufacturing, tells her friend, Jacob, who works in customer service for Duke, that she is writing journal entries to transfer costs to products. Carolina is...
-
Windjammer Technologies Ltd has been having difficulty collecting its accounts receivable. For the year 2019, the company increased the allowance for doubtful accounts by $53 000, bringing the...
-
Review and summarize "Causes of the 2008 Financial Crisis by Kimberly Amadeo. https://www.thebalance.com/what-caused-2008-global-financial-crisis-3306176
-
earning's power of Allison Boone, less any of the earnings she would have personally needed for her normal living requirements. Also, the value that she provided for her family as a wife and mother,...
-
what are the benefits and challenges of creating and using zero based budgeting?
-
) Suppose you use a call spread strategy on 4/15/2020, by buying a Facebook call option with the strike price of $180 at $7 and selling a Facebook call option with the strike price of $195 at $2....
-
How do you solve for the NATCF when you have: 1.Inflows 2.Outflows 3.Other cash effects 4.Depreciation 5.Loan Payment 6.Loan interest 7.Taxable income 8.Taxes What is the formula?
-
In cell P9, enter a formula using the SUM function that calculates the revenue collected by Silver Screen Cinemas for the event. This formula should add together the following values: a.The total...
-
A company is deciding which of three locations to choose for a new mail-order sorting facility. The table below shows each location's labor cost and overhead rate per hour. The new facility is...
-
Record the following selected transactions for March in a two-column journal, identifying each entry by letter: (a) Received $10,000 from Shirley Knowles, owner. (b) Purchased equipment for $35,000,...
-
The following information from Jefferson Company's operations is available: Required a. Prepare a multiple-step income statement. Disregard earnings per share amounts. b. Prepare a single-step income...
-
Lincoln Corporation began the year with 50,000 shares of common stock outstanding. On May 1, an additional 18,000 shares of common stock were issued. On July 1, 20,000 shares of common stock were...
-
The following summarized data are related to Kennedy Corporation's operations: Required Prepare a multiple-step income statement for Kennedy Corporation. Include earnings per share disclosure at the...
Study smarter with the SolutionInn App