Kwang Hee Company has been engaged in the process of forecasting its financing needs over the next quarter and has made the following forecasts of planned cash receipts and disbursements: (20 marks)

a) Historical and predicted sales:

April RM 80,000 , August RM 130,000

May RM 100,000 , September RM 120,000

June RM 120,000 , October RM 100,000

July RM 130,000 , November RM 110,000

b) The collection of the sales receipt are as follows:

i. 50% is collected in the month of sales

ii. 35% is collected one month after sales

iii. 10% is collected two month after sales

iv. 5% is uncollected

c) Merchandise is purchased two month before the sales month and is paid 1 month after it was sold. Purchases equal 80% of sales.

d) Monthly rent expenses of RM 3,000

e) Wages and salaries for the coming months are estimated as follows:

July RM 18,000 ,September RM 16,000 , August RM 18,000

f) Utilities for the firm average 2% of sales and are paid in the month of their incurrence.

g) RM 1,000 tax payments are to be made in the second month of each quarter.

h) A 9% annual interest rate on a RM 400,000 term loan will be paid monthly.

i) Beginning cash balance for the budget period is RM 5,000 and its minimum desired balance is RM 10,000.

j) Based on the above information, how to prepare a monthly cash budget for three month period ended 30th September.