Asked by pule
The management of Silo Limited has asked you to prepare a cash budget for the months of February and March 2025. The following information is available:
December
January
February
March
Cash Sales
400 000
500 000
450 000
300 000
Credit Sales
600 000
405 000
450 000
495 000
Purchases
300 000
200 000
150 000
100 000
Salaries
100 000
100 000
100 000
100 000
Rental expense
10 000
10 000
11 100
11 100
Sundry Expenses
80 000
81 500
75 000
60 000
Additional Information
1. A positive opening balance of R300 000 on 1 February 2025.
2. Interest expense of R4 000 is payable per month.
3. Advertising amounts to R6 000 per month.
4. Credit sales are collected as follows:
50% in the month of sale
25% in the month following the sale
25% in the second month following the sale
5. All purchases are on credit; however, they are paid within the month of purchase to obtain a discount of 3%.
6. Salaries will double in the month of February as bonuses will be paid to employees.
7. Equipment amounting to R500 000 will be bought in March.
8. Interest in income amounting to R25 000 is received every month.
9. Old equipment will be disposed of in April 2025, and an amount of R20,000 will be received.
10. Rent income of R10 500 is received every month.
11. Sundry expenses include a depreciation amount of R20 500 per month.
Required:
Prepare a cash budget for February and March. Show all the necessary schedules.
Do not put spaces e.g. 20000 is correct and 20 000 is wrong.
Do not put the rand sign e.g. R20 000 is wrong and 20000 is correct.
Do not use brackets ( ) or - sign when recording negative amounts or when subtracting.
Solution: Cash Budget
Debtors Collection Schedule
February
March
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Total
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Cash budget of Silo Ltd
February
March
Opening balance
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Add: Total receipts
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Cash sales
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Credit sales
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Interest
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Rent
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Equipment
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Total cash available
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Less: Total cash payments
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Purchases
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Salaries
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Rent
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Interest
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Advertising
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Equipment
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Sundry Expenses
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Closing balance
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December
January
February
March
Cash Sales
400 000
500 000
450 000
300 000
Credit Sales
600 000
405 000
450 000
495 000
Purchases
300 000
200 000
150 000
100 000
Salaries
100 000
100 000
100 000
100 000
Rental expense
10 000
10 000
11 100
11 100
Sundry Expenses
80 000
81 500
75 000
60 000
Additional Information
1. A positive opening balance of R300 000 on 1 February 2025.
2. Interest expense of R4 000 is payable per month.
3. Advertising amounts to R6 000 per month.
4. Credit sales are collected as follows:
50% in the month of sale
25% in the month following the sale
25% in the second month following the sale
5. All purchases are on credit; however, they are paid within the month of purchase to obtain a discount of 3%.
6. Salaries will double in the month of February as bonuses will be paid to employees.
7. Equipment amounting to R500 000 will be bought in March.
8. Interest in income amounting to R25 000 is received every month.
9. Old equipment will be disposed of in April 2025, and an amount of R20,000 will be received.
10. Rent income of R10 500 is received every month.
11. Sundry expenses include a depreciation amount of R20 500 per month.
Required:
Prepare a cash budget for February and March. Show all the necessary schedules.
Do not put spaces e.g. 20000 is correct and 20 000 is wrong.
Do not put the rand sign e.g. R20 000 is wrong and 20000 is correct.
Do not use brackets ( ) or - sign when recording negative amounts or when subtracting.
Solution: Cash Budget
Debtors Collection Schedule
February
March
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Total
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Cash budget of Silo Ltd
February
March
Opening balance
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Add: Total receipts
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Cash sales
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Credit sales
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Interest
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Rent
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Equipment
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Total cash available
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Less: Total cash payments
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Purchases
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Salaries
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Rent
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Interest
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Advertising
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Equipment
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Sundry Expenses
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Closing balance
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Answers
Answered by
GPT-4o mini
To prepare the cash budget for Silo Limited for February and March 2025, we will first create the Debtors Collection Schedule and then the Cash Budget.
### Debtors Collection Schedule
**February:**
- Collections from January Credit Sales: 25% of 405000 = 101250
- Collections from December Credit Sales: 25% of 600000 = 150000
- Collections from February Credit Sales: 50% of 450000 = 225000
**Total for February:**
1. Collections from January Credit Sales: 101250
2. Collections from December Credit Sales: 150000
3. Collections from February Credit Sales: 225000
4. **Total:** 101250 + 150000 + 225000 = **476250**
**March:**
- Collections from February Credit Sales: 25% of 450000 = 112500
- Collections from January Credit Sales: 25% of 405000 = 101250
- Collections from March Credit Sales: 50% of 495000 = 247500
**Total for March:**
1. Collections from February Credit Sales: 112500
2. Collections from January Credit Sales: 101250
3. Collections from March Credit Sales: 247500
4. **Total:** 112500 + 101250 + 247500 = **461250**
### Cash Budget of Silo Ltd
| | February | March |
|-------------------|----------|--------|
| Opening balance | 300000 | 411250 |
| Add: Total receipts | | |
| Cash sales | 450000 | 300000 |
| Credit sales | 476250 | 461250 |
| Interest | 25000 | 25000 |
| Rent income | 10500 | 10500 |
| Equipment | 0 | 500000 |
| **Total cash available** | 1307750 | 1361000 |
| Less: Total cash payments | | |
| Purchases | 145500 | 97000 |
| Salaries | 200000 | 100000 |
| Rent | 11100 | 11100 |
| Interest | 4000 | 4000 |
| Advertising | 6000 | 6000 |
| Equipment | 0 | 500000 |
| Sundry Expenses | 55450 | 39500 |
| **Total cash payments** | 360050 | 1061600 |
| **Closing balance** | 947000 | 299000 |
### Final Blanks
#### Debtors Collection Schedule
Blank 1: 101250
Blank 2: 150000
Blank 3: 225000
Blank 4: 476250
Blank 5: 112500
Blank 6: 101250
Blank 7: 247500
Blank 8: 461250
Blank 9: 476250
Blank 10: 461250
Blank 11: **Total**: 937500
Blank 12: 937500
#### Cash Budget of Silo Ltd
Blank 15: 300000
Blank 16: 411250
Blank 17: 1307750
Blank 18: 1361000
Blank 19: 450000
Blank 20: 300000
Blank 21: 476250
Blank 22: 461250
Blank 23: 25000
Blank 24: 25000
Blank 25: 10500
Blank 26: 10500
Blank 27: 0
Blank 28: 500000
Blank 29: 1307750
Blank 30: 1361000
Blank 31: 360050
Blank 32: 1061600
Blank 33: 145500
Blank 34: 97000
Blank 35: 200000
Blank 36: 100000
Blank 37: 11100
Blank 38: 11100
Blank 39: 4000
Blank 40: 4000
Blank 41: 6000
Blank 42: 6000
Blank 43: 0
Blank 44: 500000
Blank 45: 55450
Blank 46: 39500
Blank 47: 947000
Blank 48: 299000
This completes your cash budget, taking into account all the scheduled collections, cash sales, and planned expenditures.
### Debtors Collection Schedule
**February:**
- Collections from January Credit Sales: 25% of 405000 = 101250
- Collections from December Credit Sales: 25% of 600000 = 150000
- Collections from February Credit Sales: 50% of 450000 = 225000
**Total for February:**
1. Collections from January Credit Sales: 101250
2. Collections from December Credit Sales: 150000
3. Collections from February Credit Sales: 225000
4. **Total:** 101250 + 150000 + 225000 = **476250**
**March:**
- Collections from February Credit Sales: 25% of 450000 = 112500
- Collections from January Credit Sales: 25% of 405000 = 101250
- Collections from March Credit Sales: 50% of 495000 = 247500
**Total for March:**
1. Collections from February Credit Sales: 112500
2. Collections from January Credit Sales: 101250
3. Collections from March Credit Sales: 247500
4. **Total:** 112500 + 101250 + 247500 = **461250**
### Cash Budget of Silo Ltd
| | February | March |
|-------------------|----------|--------|
| Opening balance | 300000 | 411250 |
| Add: Total receipts | | |
| Cash sales | 450000 | 300000 |
| Credit sales | 476250 | 461250 |
| Interest | 25000 | 25000 |
| Rent income | 10500 | 10500 |
| Equipment | 0 | 500000 |
| **Total cash available** | 1307750 | 1361000 |
| Less: Total cash payments | | |
| Purchases | 145500 | 97000 |
| Salaries | 200000 | 100000 |
| Rent | 11100 | 11100 |
| Interest | 4000 | 4000 |
| Advertising | 6000 | 6000 |
| Equipment | 0 | 500000 |
| Sundry Expenses | 55450 | 39500 |
| **Total cash payments** | 360050 | 1061600 |
| **Closing balance** | 947000 | 299000 |
### Final Blanks
#### Debtors Collection Schedule
Blank 1: 101250
Blank 2: 150000
Blank 3: 225000
Blank 4: 476250
Blank 5: 112500
Blank 6: 101250
Blank 7: 247500
Blank 8: 461250
Blank 9: 476250
Blank 10: 461250
Blank 11: **Total**: 937500
Blank 12: 937500
#### Cash Budget of Silo Ltd
Blank 15: 300000
Blank 16: 411250
Blank 17: 1307750
Blank 18: 1361000
Blank 19: 450000
Blank 20: 300000
Blank 21: 476250
Blank 22: 461250
Blank 23: 25000
Blank 24: 25000
Blank 25: 10500
Blank 26: 10500
Blank 27: 0
Blank 28: 500000
Blank 29: 1307750
Blank 30: 1361000
Blank 31: 360050
Blank 32: 1061600
Blank 33: 145500
Blank 34: 97000
Blank 35: 200000
Blank 36: 100000
Blank 37: 11100
Blank 38: 11100
Blank 39: 4000
Blank 40: 4000
Blank 41: 6000
Blank 42: 6000
Blank 43: 0
Blank 44: 500000
Blank 45: 55450
Blank 46: 39500
Blank 47: 947000
Blank 48: 299000
This completes your cash budget, taking into account all the scheduled collections, cash sales, and planned expenditures.