Summary
Summary Mancosa Capital budgeting Revision
- Course
- Capital budgeting
- Institution
- Management College Of Southern Africa (MANCOSA)
Answers are given to some of the Questions
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QUESTION 2 (20 Marks)REQUIRED
Use the following information provided by BCCI Enterprises to prepare the following for November and
December 2019:
2.1 Debtors Collection Schedule (6 marks)
2.2 Cash Budget. (14 marks)
Note: Where applicable, round off amounts to the nearest Rand.
INFORMATION
1. BCCI Enterprises expects to have a bank overdraft of R35 000 on 31 October 2019.
2. Budgeted sales for September to December 2019 are as follows:
September R370 000
October R280 000
November R260 000
December R270 000
3. Credit sales account for 70% of total sales. The balance of the sales is for cash.
4. Amounts owing by debtors are usually collected as follows:
* 20% is collected in the same month as the credit sales;
* 60% is collected one month after the sale;
* 15% is collected two months after the sale.
5% is written off as irrecoverable.
5. Sixty percent (60%) of the goods purchased are for cash and the balance is purchased on credit.
Budgeted purchases are as follows:
October R190 000
November R180 000
December R200 000
Creditors are paid in the month after the purchase.
6. The monthly salary expense of R105 000 is expected to increase by 10% from 01 December 2019.
7. Interest on loan is paid monthly at an interest rate of 18% per annum on the loan balance of R120 000.
8. Advertising expenses are paid monthly and are estimated to be 5% of the total sales of the previous
month.
9. The proprietor drawings for November and December 2019 are expected to total R15 000. R3 000 of
this amount consists of trading goods and the rest is cash.
10. Other cash operating expenses are expected to increase by 5% per month. Cash operating expenses
for October 2019 are expected to amount to R10 000.
2
&&
,1.1 Debtors Collection schedule
Credit sales November December
SEPTEMBER 259 000
November (259 000x15%) 38 850
OCTOBER 196 000
November (196 000x60%) 117 600
December (196 000x15% 29 400
NOVEMBER 182 000
November (182 000x20% 36 400
December (182 000x60% 109 200
DECEMBER 189 000 37 800
(189 000X20%)
192 850 176 400
,Workings
sales
September October November December
advertising 14 000 13 000
Total sales 370 000 280 000 260 000 270 000
Cash sales (30%) x x 78 000 81 000
Credit sales (70%) 259 000 196 000 182 000 189 000
20% in the same sept oct 20%nov 20% dec
month
60% 1 month after oct 60%nov 60% dec 60% jan
15% 2 months after nov 15%dec 15% jan 15% feb
PURCHASES
October November December
Total purchases 190 000 180 000 200 000
Cash purchases (60%) x 108 000 120 000
Credit purchases (40%) 76 000 72 000 80 000
76 000 72 000
2.2
BCCI Enterprises
Cash Budget for November and December 2019
November December
CASH RECEIPTS 270 850 257 400
Cash Sale 78 000 81 000
Receipts from debtors 192 850 176 400
CASH PAYMENTS (327 300) (345 325)
Cash purchases 108 000 120 000
Payments to creditors 76 000 72 000
Salaries (Dec -105 000+10%) 105 000 115 500
Interest on loan ( 120 000*18%=21 600/12 1 800 1 800
Advertising (Nov280 000*5%,Dec 260 000x5%) 14 000 13 000
Drawings (15 000-3 000) 12 000 12 000
Operating expenses(Nov 10 000+5%=10 500 10 500 11 025
Dec 10 500+5%=11 025)
Cash surplus/cash deficit (56 450) (87 925)
Opening cash balance (35 000) (91 450)
Closing cash balance (91 450) (179 375)
, Answer ALL questions.
QUESTION 1 (20 Marks)
REQUIRED
Use the information provided below to prepare the:
1.1 Pro Forma Statement of Comprehensive Income for the year ended 31 December 2018. (6 marks)
1.2 Pro Forma Statement of Financial Position as at 31 December 2018. (14 marks)
INFORMATION
DUCO LTD
PRO FORMA STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED
31 DECEMBER 2017
R
Sales 5 760 000
Cost of sales (4 320 000)
Gross profit 1 440 000
Expenses (including interest expense) (720 000)
Profit before tax 720 000
Company tax (216 000)
Profit after tax 504 000
PRO FORMA STATEMENT OF FINANCIAL POSITION AS AT 31 DECEMBER 2017
R
ASSETS
Non-current assets 2 520 000
Fixed/Tangible assets 2 520 000
2 160 000
Current assets
720 000
Inventories
Trade debtors 1 080 000
Cash and cash equivalents 360 000
Total assets 4 680 000
02 1
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