CHAPTER THREE Financial Forecasting and Planning 102 September 2014: Section B. Question 1 As a Financial Manager of Worldwide Company, you are required to prepare a cash budget for the fourth quarter of 2013. Below are several information and assumptions in preparing the cash budget. CREDIT SALES (RM) MONTH TOTAL SALES (RM) YEAR 2013 45,000 25,750 July August September 55,000 35,000 60,000 45,000 October 80,000 50,000 November 85,000 65,000 December 55,000 35,000 2014 80,000 50,000 January February 85,000 65,000 a) 70 percent of the credit sales will be collected in the month following sales, and the remaining 30 percent in the second month following sales. b) Purchases are 60 percent of total sales and are made in the month of sales. The supplier is paid equally in the two months after purchase. c) Rental of RM2,500 is received every month. d) The company will pay insurance premiums of RM3,200 and dividends of RM25,000 in the month of December. e) The company also plans to acquire a new computer worth RM3,500 in October. It is agreed that 25 percent is on cash basis and the balance will be paid in the next month. f) Interest payment of RM15,000 is payable at the beginning of every quarter. g) Other monthly expenses are as follows: Depreciation of RM10,000. Wages and salaries of RM20,000. Utilities amount to 2 percent of the current month's total sales. Other expenditures of RM2,000. h) Beginning cash balance in October is RM35,000. i) The company intends to hold RM25,000 every month. j) Interest rate of 12percent per year will be charged if the company makes a loan. (20 marks)