QUESTION $4$

$(20$ Marks$)$

REQUIRED

Use the information given below to prepare the following for the first three months of operations $($i$.$e$.$

January, February and March $2025)$:

$4\mathrm{.}1$ Debtors Collection Schedule

$(6$ marks$)$

$4\mathrm{.}2$ Cash Budget

$(14$ marks$)$

INFORMATION

The following information relates to Crompton Manufacturers which will commence business on $01$

January $2025$ with a capital contribution of R$400000$ cash:

$1.$ A loan of R$200000$ is expected to be obtained from Len Bank on at the start of January $2025.$

A repayment of R$5000$ per month plus interest at a rate of $12\%$ per year will be paid at the end

of each month, commencing January $2025.$

$2.$ New machinery and equipment will be purchased on $02$ January $2025$ for R$180000.$ A deposit

of $20\%$ will be paid immediately. The balance of the debt as well as finance charges of R$16000$

will be paid in $10$ equal monthly instalments commencing February $2025.$

Estimated production and sales are as follows:

$4.$ The sales price will be set at R$40$ per unit. Cash sales are expected to comprise $70\%$ of the total

sales. A cash discount of $10\%$ will be granted to these customers. The balance of the sales will

be on credit. Thirty percent $(30\%)$ of the amount owing is expected to be received in the month

of the sale and a discount of $2\mathrm{.}5\%$ will be granted to these customers. The balance is expected

to be collected the month after the sale.

$5.$ Variable manufacturing costs per unit are forecast as follows:

Direct materials will be purchased on credit to meet the production requirements of each month,

$6.$ Creditors are expected to be paid in the month after the purchase.

$7.$ Direct labour costs are settled monthly.

$8.$ Variable manufacturing overheads will be paid in the month in which they are incurred.

$9.$ Fixed costs amount to R$30000$ per month $($excluding depreciation of R$1500$ per month$)$ and are paid monthly