The following information pertains to SMR Ltd for the three months ended 31 December. Additional information: 1. It is expected that debtors will settle their accounts as follows: -20 % in the month of invoice -70% in the month after the month of invoice, and -5% in the second month after the month of invoice. - 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 November was R 16000. Required: 4.1 Prepare the cash budget for November and December. 4.2 Discuss how the budgeting process in an organisation benefits a functioning standard costing system.
The following information pertains to SMR Ltd for the three months ended 31 December. Additional information: 1. It is expected that debtors will settle their accounts as follows: -20 % in the month of invoice -70% in the month after the month of invoice, and -5% in the second month after the month of invoice. - 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 November was R 16000. Required: 4.1 Prepare the cash budget for November and December. 4.2 Discuss how the budgeting process in an organisation benefits a functioning standard costing system.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:The following information pertains to SMR Ltd for the three months ended 31 December. Additional
information: 1. It is expected that debtors will settle their accounts as follows: -20 % in the month of invoice
-70% in the month after the month of invoice, and -5% in the second month after the month of invoice. -
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 November was R 16000.
Required: 4.1 Prepare the cash budget for November and December. 4.2 Discuss how the budgeting process
in an organisation benefits a functioning standard costing system.
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