Question
Part 1 Projected sales revenue for PeeKayPee Sdn. Bhd. for the first eight months of 2021 are as follows: Month Sales (RM) Januari 85,000 Februari
Part 1
Projected sales revenue for PeeKayPee Sdn. Bhd. for the first eight months of 2021 are as follows:
Month | Sales (RM) |
Januari | 85,000 |
Februari | 125,000 |
Mac | 115,000 |
April | 235,000 |
Mei | 295,000 |
Jun | 265,000 |
Julai | 215,000 |
Ogos | 115,000 |
From total monthly sales revenue, 10% is made up of cash sales. 50% of the total monthly sales are collected in the first month after the sale is made while the remaining 40% is collected in the second month after the sale is made. Total sales for November and December 2020 are RM95,000 and 102,000 respectively
PeeKayPee monthly merchandise inventory purchases are scheduled as follows:
Month | Sales (RM) |
Januari | 72,500 |
Februari | 82,400 |
Mac | 142,300 |
April | 175,000 |
Mei | 163,200 |
Jun | 138,300 |
Julai | 91,800 |
Payment for the inventory purchase of the merchandise is made in the month in which the purchase is made.
PeeKayPee pays RM9,000 per month for business premises rental expenses and another RM22,000 for various other related expenses. Tax payments amount to RM19,500 and are paid by PeeKayPee on a quarterly basis, starting in March
The final cash balance of PeeKayPee as at 31 December 2020 is RM22,400. The Company has a monetary policy stipulated to maintain a minimum cash balance of RM20,000 at all times. If the minimum cash balance requirement cannot be met, the company can obtain short-term cash financing facilities at a rate of 12% per annum. These interest expenses are paid on a monthly basis.
Some or all of this financing amount will be repaid next month if the company has a cash surplus in that month. Therefore, if the company expects to require additional short-term financing amounting to RM60,500 in February, the loan will be made in early February with interest of RM605 (12% x 1/12 x RM60,500). This interest will be paid in early March.
Based on the information provided, prepare a cash budget for PeeKayPee for the first six months of 2021.
(20 marks)
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started