The information provided below was taken from the books of Uli Enterprise for the financial year ended 31 May 2018. Extract of statement of comprehensive income for the year ended 31 May 2018 R Sales 480 000 Cost of sales 240 000 Rent income 12 000 Advertising 4 800 Salaries and wages 72 000 Rates and taxes 1 200 Other operating expenses 96 000 Additional information: 1. All inventories are priced at cost plus 25%. 2. Sales are divided equally each month. Sales are expected to increase by 18% for the financial year ending 31 May 2019. 3. Fifty percent (50%) of the sales are for cash and the balance is on credit. Debtors normally pay their accounts as follows:  40% in the month of the sale, and these debtors are entitled to a 5% discount;  55% one month after the sale The balance is usually written off as bad debts. 4. Purchases for June and July are expected to be 20 000 per month. All purchases are for cash. 5. In terms of the lease agreement rent is received monthly. The rent for the year ending 31 May 2019 is expected to be 10% more than the previous twelve months. 6. Advertising is paid for monthly and is estimated to be 8% of each month’s sales. 7. Salaries and wages will increase by 10% with effect from 01 July 2018. 8. Rates and taxes are paid in one instalment for the year during July 2018. Rates are calculated at 80 cents (R0.80) per R100 on the value of the premises. The premises are valued at R300 000. 9. Other operating expenses are expected to increase by 5% and are spread evenly throughout the year. Operating expenses are paid for in the month in which they are incurred. 10. On 31 May 2018 an unfavourable bank balance of R18 000 appeared in the ledger of Uli Enterprise. Required: Prepare each of the following for June and July 2018 from the information provided above. (Provide separate monetary columns for each month.) 1.1 Debtors collection schedule 1.2 Cash budget

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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The information provided below was taken from the books of Uli Enterprise for the financial year ended 31 May 2018. Extract of statement of comprehensive income for the year ended 31 May 2018 R Sales 480 000 Cost of sales 240 000 Rent income 12 000 Advertising 4 800 Salaries and wages 72 000 Rates and taxes 1 200 Other operating expenses 96 000 Additional information: 1. All inventories are priced at cost plus 25%. 2. Sales are divided equally each month. Sales are expected to increase by 18% for the financial year ending 31 May 2019. 3. Fifty percent (50%) of the sales are for cash and the balance is on credit. Debtors normally pay their accounts as follows:  40% in the month of the sale, and these debtors are entitled to a 5% discount;  55% one month after the sale The balance is usually written off as bad debts. 4. Purchases for June and July are expected to be 20 000 per month. All purchases are for cash. 5. In terms of the lease agreement rent is received monthly. The rent for the year ending 31 May 2019 is expected to be 10% more than the previous twelve months. 6. Advertising is paid for monthly and is estimated to be 8% of each month’s sales. 7. Salaries and wages will increase by 10% with effect from 01 July 2018. 8. Rates and taxes are paid in one instalment for the year during July 2018. Rates are calculated at 80 cents (R0.80) per R100 on the value of the premises. The premises are valued at R300 000. 9. Other operating expenses are expected to increase by 5% and are spread evenly throughout the year. Operating expenses are paid for in the month in which they are incurred. 10. On 31 May 2018 an unfavourable bank balance of R18 000 appeared in the ledger of Uli Enterprise. Required: Prepare each of the following for June and July 2018 from the information provided above. (Provide separate monetary columns for each month.) 1.1 Debtors collection schedule 1.2 Cash budget

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