Reference no: EM13537822

Jodie Products Limited is a merchandising company that sells stationery and other school supplies. The company is planning its cash needs for 2014/2015. In the past Jodie Products had to borrow money in order to support peak sales of back-to-school material, which occur during January. The following information has been provided to assist in preparing a cash budget for the period:

Note the following additional information:

• Administrative expenses include N$2 000 depreciation each month.
• 20 % of sales are cash sales. Credit sales are collected over a three-month period in the ratio of 10% in the month of sale; 70% in the month following sale and 20% in the second month following sale. October sales amounted to N$30 000, and November sales to N$36 000.
• Inventory purchases are paid for within 15 days. Therefore 50% of a month's inventory purchases are paid for in the month of purchase. The remaining 50% is paid in the following month.
• Purchases amount to 75% of the following month's sales.
• Dividends of N$1 000 will be declared and paid in February.
• The cash balance on 30 November was N$8 000. The company must maintain a cash balance of at least N$8 000 at all times.
• The company can borrow cash from the bank as needed. Loans are received in multiples of N$1 000. Interest paid on loans are 15% per annum, payable monthly.

Prepare a cash budget for December, January and February. When will Jodie products be able to repay the loan?