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Prepare Cash Budget - Ace Traders

Good Day,

Please assist with the attached question.

Regards

The following information pertains to Ace Traders for the three months ended 31 May 2007.

Actual March Budgeted
April May
R R R
Sales (20% for cash and 80% on credit) 360 000 380 000 400 000
Purchases (10% for cash and 90% on credit) 240 000 280 000 320 000
Salaries and Wages Paid 40 000 60 000 60 000
Cash Expenses 24 000 28 000 32 000
Depreciation 2 000 2 000 2 000

Additional Information:
1. 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.

1. The remaining 5% is usually written off as bad debts.
2. Trade creditors are paid in the month after the purchases at a discount of 5%.
3. 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.
4. Expenses are paid as they arise.
5. The favourable bank balance on 1 April was R14 800.

REQUIRED:
Prepare the Cash Budget of Ace Traders for April and May 2007.

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