Tutorial 5 Budgeting 2024

20 MARKS

Onawa Trading (Pty) Ltd manufactures and sells plastic packaging containers to local
companies. The company does not export any of its products. Onawa Trading has a 31
December financial year end it sells on a cash and credit basis. In August 2022, the company
appointed a new Chief Financial Officer (CFO), Mr. De Koe. For the 2023 financial year, the
newly appointed CFO has indicated that it is critical that accurate monthly cashflow projections
are maintained so that the company can identify if there is a need for management
intervention.

This was specifically triggered by the fact that Onawa trading in the previous financial year,
found itself not being able to settle its short-term obligations and this situation was worsened
by the fact that no prior arrangements had been made with creditors or financial institutions to
ease the burden.

The following information has been availed to you as the company’s Management Accountant
for the following months in the 2023 financial year:

ACTUAL BUDGETED
February March April May June
Note N$ N$ N$ N$ N$
Sales:
Cash 2 250 600 290 500 305 700 300 000 320 000
Credit 1 & 2 410 500 500 500 585 800 580 000 600 000
Purchases 5 595 400 685 700 700 800 690 000 710 000
Salaries and Wages 3 65 800 65 800 65 800 65 800 65 800
Sundry expenses 4 18 700 19 400 25 400 20 500 21 500

Notes:

1. Cash in respect of credit sales is collected as follows:

❖ 50% within 30 days
❖ 30% within 60 days
❖ 15% within 90 days
❖ 5% is uncollectible.
2. The following discounts are allowed on sales:
❖ 10% on cash sales
❖ 5% on credit sales if the accounts are settled within 30 days.
3. Salaries and wages are paid in cash.
4. Sundry expenses include depreciation of N$3 000 per month.
5. Sixty percent (60%) of all purchases are on credit and are paid during the month that
follows the month of the transaction.
6. On 30 June 2023, dividend of N$5 000 was declared.
7. The cash in the bank on 30 April 2023 was N$15 500.

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 Tutorial 5 Budgeting 2024

REQUIRED

REQUIRED:
(1) Using Microsoft Excel, Prepare the cash budget for the month of May 2023 20
and June 2023. (Show all your workings separately)