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GRADE 11
WEEK 27 - Lesson 2 of 12
LESSON
90
Sales Budget
The sales budget of the business will include the budgeted cash sale and budgeted credit sale if they do trade on credit.
Credit sales
You need to take into consideration that when goods are sold on credit:

Proper screening of customers should be done

Compliance with National credit Act .(You cannot give a debt to a customer who cannot afford paying back)

Sales will increase and the also the risk of bad debts
 Administrative expenses will also increase, maintaining and monitoring debtors’ accounts.
Debtors’ collection schedule
Reflects the amounts expected to be owed by debtors and as well as receipts from debtors.
The following information is used to prepare the debtors schedule:

Expected credit sales to debtors

Actual credit sales

Credit policy that determines period for collecting debtors accounts , the trader must clearly indicate the credit terms to be allowed e.g.30 days, 60 days, 90 days etc.

The cash discount, the customer can be entitled to when he pays before the stipulated date.

Advanced exercises will provide you with the balance of debtors control and amounts to be received from debtors.
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90 Accounting Grade 11 - CAPS

Let’s do an exercise to clarify this concept
Green Store’s credit sales were as follows:
Month
July
August
September
October
November
Actual
80 000
90 000
Budgeted
96 000
100 000
110 000
Debtors usually settle their accounts as follows

50% during the month of sales (transaction month)

30% during the month following the month of sales (one month after sales / 30 days)

18% during the second month after sales (two months after sale / 60 days)

2% irrecoverable debts (bad debts/ 90 days)
Required
Calculate the expected collections from debtors during the budgeted months of September,
October and November.
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90 Accounting Grade 11 - CAPS

Solution Debtors Collection Schedule schedule
Always start with the Actual sales when preparing the debtors collection
Debtors collection schedule
Collection period
Month Credit sales Terms
July 80 000 × 50 % (July) same month
September October
× 30 % (Aug) 30 days
× 18 % (Sept) 60 days
Aug 90 000 × 50 % (Aug)
14 400
November
× 30 % (Sept) 27 000
× 18 % (Oct )
Sept 96 000 × 50 % (Sept )
48 000
16 200
× 30% (Oct )
× 18 % (Nov)
Oct 100 000 × 50 % (Oct)
× 30 % (Nov )
× 18 % (Dec )
Nov 110 000 × 50% (Nov)
× 30% (Dec)
× 18% (Jan)
28 800
50 000
172 80
30 000
55 000
89 400 95 000 102 280 Receipts from debtors
Show only the amounts to be collected for the specific months
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90 Accounting Grade 11 - CAPS

OR
Debtors’ collection schedule
Month Credit sales Terms
50 % 30 % 18 %
July 80 000
Aug 90 000
September
14 400
27 000
Collection period
October November
16 200
48 000 28 800
50 000
17 280
30 000
Sept 96 000
Oct 100 000
Nov 110 000
Receipts from debtors 89 400 95 000
Transfer amounts from Debtors’ collection schedule to Cash budget
55 000
102 280
Extract from the Cash Budget
Cash Receipts
Cash Sales
September October xxx xxx
November xxx
Receipts from debtor 89 400 95 000 102 280
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90 Accounting Grade 11 - CAPS