The following forecasted information was taken from the books of Pakhama Enterprises.The following information is also provided for Pakhama Enterprises:60% of all sales is on credit.Debtors are expected to pay their debts as follows:• 70% in the first month after the sale (after 30 days)• 20% in the second month after the sale (after 60 days)• 7 % in the third month after the sale (after 90 days)• 3% is irrecoverableCredit losses are written off at the end of the month in which the last instalment is received.Debtors will amount to R104 994 on 1 Jan 2020.Total sales for 2019 are as follows:• October 2019 = R120 000• November 2019 = R132 000• December 2019 = R135 000Month 2020 Budgeted SalesJanuary 120 000February 140 000March 168 000April 144 000May 128 000June 100 000 Required:Q.3.1 Prepare the schedule of budgeted receipts from debtors for the period 1 January2020 to 31 March 2020. Round to two decimals.Q.3.2 Pakhama Enterprises wants to extent its credit terms in order to increase the sales togrow the business. A consultant has, however, warned them that this can lead to overtrading.Do some research on overtrading and prepare and e‐mail to management in whichyou explain what overtrading is as well as what the dangers of overtrading are.Remember to reference your answer and add your reference list to the bottom of this question.
The following
The following information is also provided for Pakhama Enterprises:
60% of all sales is on credit.
Debtors are expected to pay their debts as follows:
• 70% in the first month after the sale (after 30 days)
• 20% in the second month after the sale (after 60 days)
• 7 % in the third month after the sale (after 90 days)
• 3% is irrecoverable
Credit losses are written off at the end of the month in which the last instalment is received.
Debtors will amount to R104 994 on 1 Jan 2020.
Total sales for 2019 are as follows:
• October 2019 = R120 000
• November 2019 = R132 000
• December 2019 = R135 000
Month 2020 Budgeted Sales
January 120 000
February 140 000
March 168 000
April 144 000
May 128 000
June 100 000
Required:
Q.3.1 Prepare the schedule of budgeted receipts from debtors for the period 1 January
2020 to 31 March 2020. Round to two decimals.
Q.3.2 Pakhama Enterprises wants to extent its credit terms in order to increase the sales to
grow the business. A consultant has, however, warned them that this can lead to overtrading.
Do some research on overtrading and prepare and e‐mail to management in which
you explain what overtrading is as well as what the dangers of overtrading are.
Remember to reference your answer and add your reference list to the bottom of this question.
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