Cash Budget Practical Problems and Solutions Assignment

Assignment Task

Question

1. Inventory Valuation

Zanadu Industries are manufacturers of solar products. You are presented with the following schedule for solar light fittings for August 2021:

2. Cash Budget

The following information was projected for Saint Le Geran Industries for the three months period ending 30 November 2021 Projections:

1. Receipts from credit sales are as follows: 20% pay on the month of the sale

• 50% pay one month after the sale
• 30% pay two months after the sale

2. Payment of credit purchases are as follows: 30% are paid on the month of the purchases 70% are paid one month after the purchases

3. Salaries are R20 000 per month and a bonus of R40 000 is paid in November.

4. Advertising expense of R13 500 will be paid in October.

5. Rent expense is paid on a monthly basis, the total yearly amount is R48 000.

6. Saint Le Geran Industries will commence business on 1 September 2021 with a favourable bank balance of R37 200. Required: Prepare the Cash budget statement, so as to ascertain the cash position at the end of each month.

Capital Expenditure Decisions

The following project is being considered by the management of Gem Industries: Project Precious has an initial investment of R320 000 and the firm's cost of capital is 14% per annum. Details of the net profit and after-tax cash flows are as follows: Calculate and answer the following questions on the proposed investment:

Accounting rate of return (two decimal places)

• Payback period (years, months and days)
• If a payback period of 2 years is required, will the project be accepted? Why?
• Net present value (round-off amounts to the nearest Rand)
• Based on the NPV, would the project be accepted? Why?

This Accounting has been solved by our PHD Experts at My Uni Paper.