Prepare the Cash Budget of AJ Traders for June and July 2021. The following information pertains to AJ Traders for the three months ended 30 June 2021: Actual Budgeted April R May R June R Sales (20% for cash and 80% on credit) 380,000 420,000 460,000 Purchase (10% for cash 90% on credit) 250,000 300,000 340,000 Salaries and wages paid 50,000 70,000 70,000 Cash expenses 28,000 32,000 36,000 Depreciation 2,000 2,000 2,000 • It is expected that debtors will settle their accounts as follows: 20% in the month of sale 70% in the month after the month of sale, and 5% in the second month after the month of sale • The remaining 5% is usually written off as bad debts. • Trade creditors are paid in the month after the purchases at a discount of 5%. • 50% of the salaries and wages are weekly wages. Because wages are paid weekly, usually 10% of the wages are paid in the month following the month in which they were incurred. • Expenses are paid as they arise. • The favourable bank balance on 1 May was R20 000. Required: Prepare the Cash Budget of AJ Traders for June and July 2021.
Master Budget
A master budget can be defined as an estimation of the revenue earned or expenses incurred over a specified period of time in the future and it is generally prepared on a periodic basis which can be either monthly, quarterly, half-yearly, or annually. It helps a business, an organization, or even an individual to manage the money effectively. A budget also helps in monitoring the performance of the people in the organization and helps in better decision-making.
Sales Budget and Selling
A budget is a financial plan designed by an undertaking for a definite period in future which acts as a major contributor towards enhancing the financial success of the business undertaking. The budget generally takes into account both current and future income and expenses.
Prepare the
The following information pertains to AJ Traders for the three months ended 30 June 2021:
|
|
Actual |
Budgeted |
|
|
|
April R |
May R |
June R |
|
Sales (20% for cash and 80% on credit) |
380,000 |
420,000 |
460,000 |
|
Purchase (10% for cash 90% on credit) |
250,000 |
300,000 |
340,000 |
|
Salaries and wages paid |
50,000 |
70,000 |
70,000 |
|
Cash expenses |
28,000 |
32,000 |
36,000 |
|
Depreciation |
2,000 |
2,000 |
2,000 |
• It is expected that debtors will settle their accounts as follows: 20% in the month of sale 70% in the month after the month of sale, and 5% in the second month after the month of sale
• The remaining 5% is usually written off as
• Trade creditors are paid in the month after the purchases at a discount of 5%.
• 50% of the salaries and wages are weekly wages. Because wages are paid weekly, usually 10% of the wages are paid in the month following the month in which they were incurred.
• Expenses are paid as they arise.
• The favourable bank balance on 1 May was R20 000.
Required:
Prepare the Cash Budget of AJ Traders for June and July 2021.
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