Question $1(25$ Marks$)$

Use the following information which relates to AG Limited to answer the questions which follow:

Information:

$1.$ Cash at bank on $1$ January $2022$ amounted to R$155000.$

$2.$ Projected sales per quarter for $2022$:

First quarter R$450000$

Second quarter R$750000$

Third quarter R$870000$

Fourth quarter R$880000$

Sixty percent $(60\%)$ of the sales are for cash and forty percent $(40\%)$ are on credit. Cash customers are entitled to a $5\%$

cash discount.

$3.$ Collection of credit sales:

$55\%$ of the credit sales are collected in the first quarter of the sale.

$35\%$ is collected in the following quarter and the balance is written off as a bad debt.

$4.$ Purchases for each quarter are expected to be as follows:

First quarter R$120000$

Second quarter R$125000$

Third quarter R$130000$

Fourth quarter R$170000$

All purchases are on credit. $70\%$ of the purchases will be paid for in the quarter of purchase and the remaining $30\%$ in the

following quarter.

$5.$ Fixed overheads total R$180000$ per year and are paid for equally each quarter.

$6.$ Administrative expenses are paid for in the quarter in which they are incurred and are estimated at a total of R$15000$

per quarter.

$7.$ Interest of R$12000$ will also be received on $30$ June $2022.$

Required:

$1\mathrm{.}1.$ Prepare the Debtors Collection Schedule for the four quarters of $2022.(10$ marks$)$

$1\mathrm{.}2.$ Prepare the Cash Budget for the four quarters of $2022.(15$ marks$)$