Techno-byte Ltd sells computers. At the beginning of May 2022 the business had an overdraft of...

 

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Techno-byte Ltd sells computers. At the beginning of May 2022 the business had an overdraft of R70 000 and the bank had asked that it be settled by the end of October 2022. As a result, the directors decided to review their plans for the next 6 months and the following is the cash budget that was subsequently drawn up for the 6 months ending 31 October 2022. Techno-byte Ltd Cash Budget for the 6 months ended 31 October 2022 Cash receipts Cash sales Cash payments Cash purchase of merchandise Administration expenses Loan repayments Selling expenses Shop refurbishment. Tax payment Cash surplus (shortfall) Opening cash balance Closing cash balance May R000 454 454 630 492 276 404 528 506 328 270 360 80 82 10 10 44 48 28 Jun Jul Aug Sep Oct R000 R'000 R'000 R000 R000 630 492 276 236 216 236 216 264 240 284 188 150 132 76 66 62 60 10 10 10 10 56 52 42 38 36 12 44 50 (70) (20) (20) 82 Additional information 102 (14) 82 68 (52) (28) (24) 68 16 (12) 16 (12) (36) - The business maintains a minimum monthly inventory level of R80 000 of merchandise. - The gross profit margin is 40%. You are required to provide a detail report based on the cash budget provided by Techno-byte on what problems are likely to be faced by Techno-byte Ltd during the 6-month period from May to October 2022? Suggest ways in which the business may deal with these problems. (25 marks) Techno-byte Ltd sells computers. At the beginning of May 2022 the business had an overdraft of R70 000 and the bank had asked that it be settled by the end of October 2022. As a result, the directors decided to review their plans for the next 6 months and the following is the cash budget that was subsequently drawn up for the 6 months ending 31 October 2022. Techno-byte Ltd Cash Budget for the 6 months ended 31 October 2022 Cash receipts Cash sales Cash payments Cash purchase of merchandise Administration expenses Loan repayments Selling expenses Shop refurbishment. Tax payment Cash surplus (shortfall) Opening cash balance Closing cash balance May R000 454 454 630 492 276 404 528 506 328 270 360 80 82 10 10 44 48 28 Jun Jul Aug Sep Oct R000 R'000 R'000 R000 R000 630 492 276 236 216 236 216 264 240 284 188 150 132 76 66 62 60 10 10 10 10 56 52 42 38 36 12 44 50 (70) (20) (20) 82 Additional information 102 (14) 82 68 (52) (28) (24) 68 16 (12) 16 (12) (36) - The business maintains a minimum monthly inventory level of R80 000 of merchandise. - The gross profit margin is 40%. You are required to provide a detail report based on the cash budget provided by Techno-byte on what problems are likely to be faced by Techno-byte Ltd during the 6-month period from May to October 2022? Suggest ways in which the business may deal with these problems. (25 marks)

Answer rating: 100% (QA)

Answer Issues looked by the company From the month to month cash budget gave from May to October obviously Technobyte Restricted is confronting not ki... View the full answer