I

Please answer the below with steps.

QUESTION 3

REQUIRED

Use the information provided below to prepare the following for August and September 2024:

3.1 Debtors Collection Schedule (4 marks)

3.2 Cash Budget (16 marks) both august and september

INFORMATION Nissa Limited is planning its business activities for August and September 2024. The bank account is expected to reflect an overdraft of R50 000 on 31 July 2024. The following forecasts have been made by Nissa Limited:

1. The sales manager anticipates the following sales volumes of finished goods at a constant price of R320 per unit:

JULY	AUGUST	SEPTEMBER	OCTOBER
2 300 units	2 900 units	3 100 units	3 300 units

Sixty percent (60%) of the sales is expected to be on credit and the collections are expected to be as follows:

30% is collected in the month of the sale and these debtors are entitled to a 5% discount.

70% is collected in the month after the sale.

The balance of the sales is for cash.

2. The expected unit primary costs of production are as follows:

Direct materials	R80 per unit
Direct labour	R70 per unit

3. Management aims to maintain a month-end inventory of finished goods of 10% of the expected sales of the following month. Materials are purchased for cash to meet the production requirements of each month. (Hint: Prepare a production budget first to determine the production requirements.)

4. Direct labour costs are incurred in line with production and are paid in the month in which they were incurred.

5. Variable overheads are budgeted at R30 per unit produced. Fixed overheads are estimated to be R120 000 per month. Overheads are payable in the month in which they are incurred. (Separate entries are required for fixed and variable overheads.)

6. R250 000 cash will be spent on the purchase of a vehicle during September 2024.

7. The company intends investing 10% of the total sales value (before any discounts) of each month in an investment account from August 2024 to finance the modernisation of its machinery during 2025.

8. As from August 2024, 2% of the total sales revenue (before any discounts) will be utilised for research and development. These costs are payable in the month after they are incurred.

PLEASE USE THE BELOW WITH THE ANSWERS 3.1

NISSA LIMITED
DEBTORS COLLECTION SCHEDULE
Month	Workings (if any)	Credit sales R		August R		September R