Use the information given below to prepare the following for Altech Limited for July and August...

 

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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)

Answer rating: 100% (QA)

Question1 11 Debtors Collection Schedule July August Sales 220000 242000 Cash Sales 30 66000 72600 C... View the full answer