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In preparation for the quarterly cash budget, the revenue and cost information have been compiled as follows: Month Sales (RM) Purchases (RM) August 2018 (actual)
In preparation for the quarterly cash budget, the revenue and cost information have been compiled as follows:
Month | Sales (RM) | Purchases (RM) |
August 2018 (actual) | 3,000,000 | 3,500,000 |
September 2018 (actual) | 4,500,000 | 2,000,000 |
October 2018 (forecast) | 1,000,000 | 500,000 |
November 2018 (forecast) | 1,500,000 | 750,000 |
December 2018 (forecast) | 2,000,000 | 1,000,000 |
- The firm collect 60 percent of sales for cash and 40 percent of its sales one month later.
- Interest income of RM50,000 on marketable securities will be received in December.
- The firm pays the purchases of 40 percent in cash and 60 percent in following month.
- Salaries and wages are RM450,000 in September, RM200,000 in October, RM150,000 in November and RM225,000 in December.
- Sales commissions are 2 percent of the preceding month's sales.
- Lease payments of RM150,000 must be made each month.
- A principal and interest payment on an outstanding loan is due in December of RM150,000.
- The firm pays dividends of RM50,000 at the end of the quarter.
- Fixed assets costing RM700,000 and RM600,000 will be purchased in October and December.
- Depreciation expense each month of RM45,000.
- The firm has a beginning cash balance in October of RM100,000 and maintains a minimum cash balance of RM200,000.
- Interest on accumulated loan is at 12 percent annual interest and paid in the following month.
Prepare a cash budget for the months of October, November and December 2018 based on the information given.
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