QUESTION 7: BUDGETING (43 marks; 26 minutes) 7.1 Indi…
QUESTION 7: BUDGETING (43 marks; 26 minutes) 7.1 Indicate whether the following statements are True or False. Write only “True” or “False” next to the numbers (7.1.1 – 7.1.3) in the ANSWER BOOK. 7.1.1 A Cash Budget is prepared to show the actual receipts and payments for a specific period. 7.1.2 A Projected Income Statement would reflect the expected profit or loss for the budget period. 7.1.3 Only nominal accounts are recorded in a Cash Budget. (3) 7.2 BALULE LTD The information relates to Balule Ltd for the 12-month budget period ended 31 May 2021. REQUIRED: 7.2.1 Complete the Debtors Collection Schedule. (7) 7.2.2 Calculate the amounts denoted by (i) to (vi) on the extract of the Cash Budget provided. (21) 7.2.3 Refer to Information J: · Calculate the percentage increase in the manager’s salary. · Comment on whether the salary and wage decision were justified. Quote figures. · Provide TWO possible consequences of this decision. (4) (4) (4) INFORMATION: A. The business sells kitchen appliances at a profit mark-up of 80% on cost. Stock is replaced in the month of sale. A base stock is maintained. B. Actual and budgeted figures for 2021: MARCH APRIL MAY Sales 255 000 261 000 229 900 Purchases 130 000 ? 120 500 C. 70% of total sales are on credit. Debtors pay as follows: · 60% in the month following the sales month. · 35% in the second month following the month of sales. · 5% is written off. D. All goods are purchased on credit. Creditors are paid after 30 days subject to a 5% discount.