Page 1 of 5
LESSON
GRADE 11
91
WEEK 27 - Lesson 3 of 12
Cash budgets : Debtors collection schedule
Budgeted credit sales and Cash sales
Example 1
Make use of the information provided below to draw up the Debtors collection period for the
three month period 01January 2013 to 31 March 2013.
Month
Actual
November
60 000
December
80 000
Budgeted
January
50 000
February
52 000
March
60 000
Debtors usually settle their accounts as follows
 60 % of debtors pay one month after the date of sale
 20 % of debtors pay two months after the date of sale
 15 % of debtors pay three months after the date of sale
 5 % irrecoverable debts (bad debts)
Note: Cash sales is 40% of total sales
1
91 - ACCOUNTING GRADE 11 CAPS
Solution
Debtors Collection Schedule
Month
Nov
Credit sales
Terms
36 000
× 60 % (Dec)
× 20 % (Jan)
Collection period
January
February
7 200
× 15 % (Feb)
Dec
48 000
× 60 % (Jan)
5 400
28 800
× 20 % (Feb)
9 600
× 15 % (Mar)
Jan
30 000
March
7 200
× 60 % (Feb)
18 000
× 20% (Mar)
6 000
× 15 % (Apr)
Feb
31 200
× 60 % (Mar)
18 720
× 20 % (Apr )
× 15 % (May )
Mar
36 000
× 60% (Apr)
× 20% (May)
× 15% (June)
Receipts from debtors
36 000
33 000
31 920
Calculations : always start with the actual sales followed by budgeted
2
91 - ACCOUNTING GRADE 11 CAPS
How these figures appear
The budgeted cash sales figure
Extract from the Cash Budget
January
February
March
Cash Receipts
Cash Sales
20 000
20 800
24 000
Receipts from debtor
36 000
33 000
31 920
The total projected sales figures
Extract from the Projected Income Statement
Sales
Credit sales
January
February
March
50 000
52 000
60 000
Budgeted cash sales
November
December
January
60 000 x 60% = 36 000
80 000 x 60 % = 48 000
50 000 x 60% = 30 000
February
March
52 000 x 60% = 31 200
60 000 x 60% = 36 000
January
February
March
50 000 x 40% = 20 000
52 000 x 40% = 20 800
60 000 x 40% = 24 000
3
91 - ACCOUNTING GRADE 11 CAPS
ACTIVITY 2
REQUIRED
Use the information provided below to prepare the Debtors collection schedule of Mzizi
Traders for October, November, and December 2013.
INFORMATION
1. Actual sales and expenses
Month
Cash Sales
Credit sales
Salaries
Depreciation
July
40 000
38 000
23 000
7 000
August
41 000
38 000
23 000
7 000
September
43 000
41 000
23 000
7 000
October
43 000
40 000
23 000
7 000
November
45 000
42 000
23 000
7 000
December
52 000
50 000
28 000
7 000
2. Budgeted sales and expenses
Month
Cash sales
Credit sales
Salaries
Depreciation
3. The enterprise encourages the debtors to pay early by allowing a 5% discount for accounts
settled within 30 days.
Debtors are expected to pay as follows:


50% in the same month as transactions (receive 5 % discount)
30% in the following month

15% after two months

5% is written off as irrecoverable
4
91 - ACCOUNTING GRADE 11 CAPS
ANSWER
Collection period
Debtors
Schedule of
Mzizi Traders
Month Collection
Credit sales
Terms
October
November
Extract from the Cash Budget of Mzizi Traders
October
November
December
December
Cash Receipts
Total Cash Receipts
The business should always be consistent when applying the discount rate to specific classes
of consumers – Consistency Principle
5
91 - ACCOUNTING GRADE 11 CAPS
ANSWERS
LESSON
91
Debtors Collection Schedule of MziziTraders
Collection period
Month
Credit sales
Terms
October
November
August
38 000
× 15 % (Oct) 5 700
September 41 000
× 30 % (Oct)
12 300
× 15 % (Nov)
October
40 000 Check calculations
6 150
19 000
× 30% (Nov)
12 000
× 15 % (Dec)
November
6 000
42 000 Check calculations
December 50 000
December
19 950
× 30 % (Dec )
12 600
Check calculations
23 750
Receipts from debtors
37 000
38 100
42 350
Calculations
October
November
December
40 000 × 50 % =
20 000
20 000 × (100 % – 5 %)
20 000 × 95 %
= 19 000
42 000 × 50 % = 21 000
21 000 × (100 % - 5 %)
21 000 × 95 %
=19 950
50 000 × 50% = 25 000
25 000 × (100 % - 5 %)
25 000 × 95 %
= 23 750
6
91 - ACCOUNTING GRADE 11 CAPS
Extract from the Cash Budget of MziziTraders
October
November
December
Cash Receipts
Cash Sales
43 000
45 000
52 000
Receipts from debtor
37 000
38 100
42 350
Total Cash Receipts
80 000
83 100
94 350
23 000
23 000
28 000
Cash Payments
Salaries
Extract from Projected Income Statement of MziziTraders
October
Sales
[Budgeted cash sales and credit sales]
Operating expenses
Salaries
Depreciation
November
December
83 000
87 000
102 000
23 000
7 000
23 000
7 000
28 000
7 000
Note:
Depreciation does not affect our Cash budget because there’s no outflow of cash
The business should always be consistent when applying the discount rate to specific classes
of consumers – Consistency Principle
7
91 - ACCOUNTING GRADE 11 CAPS