Cheap Electronics (Pty) Ltd sells electronic equipment at a discount. Cash sales represent 20% of all...

     

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Cheap Electronics (Pty) Ltd sells electronic equipment at a discount. Cash sales represent 20% of all sales, and credit sales (on account) represent 80% of all sales. Of the credit sales made, 40% of a month's sales are collected in the same month of sale, 50% are collected in the month following the sale, and 7% are collected in the second month following the sale and 3% is irrecoverable. Cash on hand on 1 November is estimated to be R41 000. Merchandise purchases and operating expenses are paid as follows: In the month during which the merchandise is purchased or the cost is incurred 60% In the subsequent month 40% Cheap Electronics (Pty) Ltd's income statement budget for each of the next three months is as follows: September October November RRR Sales 280 000 338 000 362 000 Cost of goods sold: 245 600 289 600 308 200 Beginning inventory 32 800 57 800 51 200 Purchases 270 600 283 000 299 400 Goods available 303 400 340 800 350 600 Less: End inventory (57 800) (51 200) (42 400) Gross profit 34 400 48 400 53 800 Operating expenses (22 800) (30 200) (28 600) Operating income 11 600 18 200 25 200 REQUIRED Prepare a cash budget for Cheap Electronics (Pty) Limited for the month of November. Cheap Electronics (Pty) Ltd sells electronic equipment at a discount. Cash sales represent 20% of all sales, and credit sales (on account) represent 80% of all sales. Of the credit sales made, 40% of a month's sales are collected in the same month of sale, 50% are collected in the month following the sale, and 7% are collected in the second month following the sale and 3% is irrecoverable. Cash on hand on 1 November is estimated to be R41 000. Merchandise purchases and operating expenses are paid as follows: In the month during which the merchandise is purchased or the cost is incurred 60% In the subsequent month 40% Cheap Electronics (Pty) Ltd's income statement budget for each of the next three months is as follows: September October November RRR Sales 280 000 338 000 362 000 Cost of goods sold: 245 600 289 600 308 200 Beginning inventory 32 800 57 800 51 200 Purchases 270 600 283 000 299 400 Goods available 303 400 340 800 350 600 Less: End inventory (57 800) (51 200) (42 400) Gross profit 34 400 48 400 53 800 Operating expenses (22 800) (30 200) (28 600) Operating income 11 600 18 200 25 200 REQUIRED Prepare a cash budget for Cheap Electronics (Pty) Limited for the month of November.

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To prepare a cash budget for Cheap Electronics Pty Ltd for the month of November we need to consider both cash inflows and outflows Lets break down th... View the full answer