QUESTION FOUR The following information relates to Hydro Limited, who will commence business on 1 January...

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QUESTION FOUR The following information relates to Hydro Limited, who will commence business on 1 January 2021. They are preparing their budget and will detail the projected activities for the first three months of the year. 1. The Cash at bank on 1 January 2021 is expected to be amounted to R10 000. 2. Projected sales are: January February March Forty percent (40%) of the sales are for cash and sixty percent (60%) are on credit. Cash customers are entitled to a 3% cash discount. 3. Collection of credit sales: 20% of the credit sales are collected in the month of the sale, and they are allowed a discount of 2% 50% is collected in the next month and the balance in the following month. 4. Purchases for each month are expected to be as follows: R80 000 R100 000 R70 000 All purchases are on credit. 70% of the purchases are paid for in the month after the purchase and the remaining 30% in the following month. 5. Monthly wages paid are expected to be R24 000. January February March R350 000 R400 000 R500 000 6. Fixed overheads total R100 000 per year and are paid for equally at the end of each quarter. 7. Administrative expenses are paid for in the month in which they are incurred and are estimated at R9 500 per month. 8. An investment of R80 000 is expected to be made with Alba Bank on 31 March 2021, at 9% per annum. 9. Rent income is expected to be R11 200 per month. Required: 4.1 4.2 Prepare the Debtors Collection Schedule for the three months. Prepare the Cash Budget for the three months. QUESTION FOUR The following information relates to Hydro Limited, who will commence business on 1 January 2021. They are preparing their budget and will detail the projected activities for the first three months of the year. 1. The Cash at bank on 1 January 2021 is expected to be amounted to R10 000. 2. Projected sales are: January February March Forty percent (40%) of the sales are for cash and sixty percent (60%) are on credit. Cash customers are entitled to a 3% cash discount. 3. Collection of credit sales: 20% of the credit sales are collected in the month of the sale, and they are allowed a discount of 2% 50% is collected in the next month and the balance in the following month. 4. Purchases for each month are expected to be as follows: R80 000 R100 000 R70 000 All purchases are on credit. 70% of the purchases are paid for in the month after the purchase and the remaining 30% in the following month. 5. Monthly wages paid are expected to be R24 000. January February March R350 000 R400 000 R500 000 6. Fixed overheads total R100 000 per year and are paid for equally at the end of each quarter. 7. Administrative expenses are paid for in the month in which they are incurred and are estimated at R9 500 per month. 8. An investment of R80 000 is expected to be made with Alba Bank on 31 March 2021, at 9% per annum. 9. Rent income is expected to be R11 200 per month. Required: 4.1 4.2 Prepare the Debtors Collection Schedule for the three months. Prepare the Cash Budget for the three months.

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