PR 9-4 Cash budget OBJ. 4,5 Total purchases for August, RM33,000 Total cash payments for August, RM35,250 Expected ending cash balance for September, RM34,125 Syarikat Perama Jaya is a merchandising firm, selling school accessories. The company is planning for its cash need for the third quarter of the year. The following information has been gathered to help you prepare the cash budget. 1. The forecasted income statements for July through October are as follows: 2. About 25% of sales are in cash, and the balances are credit sales. 3. Cash collections from credit sales are as follows: - 40% in the month of sales - 30% in the first month after sales - 30% in the second month after sales Total sales in May was RM30,000 and RM36,000 in June. 4. Merchandise purchases will be paid within 15 days. About 50% of the purchases are paid in the current month and another half will be paid in the following month. The ending balance of accounts payable on June 30 was RM11,700. 5. The desired ending inventory is equal to 75% of the cost of goods sold for the following month. 6. The company plans to purchase an equipment costing RM4,500 in July. 7. Dividend of RM35,000 will be declared and paid in September, if there is sufficient cash. 8. The cash balance on June 30 was RM25,000, and the company wants to have this balance maintained every month. 9. If necessary, the company will borrow money from banks and assume that bank loan and its repayment are in multiples of RM1,000. Loans are made at the beginning and repayments are at the end of month. Interest charge on loans is at 12% per year. Instructions Prepare the followings for the third quarter of the year: a. Schedule of cash collections from sales b. Purchases budget c. Schedule of cash payments for purchases d. Cash budget PR 9-4 Cash budget OBJ. 4,5 Total purchases for August, RM33,000 Total cash payments for August, RM35,250 Expected ending cash balance for September, RM34,125 Syarikat Perama Jaya is a merchandising firm, selling school accessories. The company is planning for its cash need for the third quarter of the year. The following information has been gathered to help you prepare the cash budget. 1. The forecasted income statements for July through October are as follows: 2. About 25% of sales are in cash, and the balances are credit sales. 3. Cash collections from credit sales are as follows: - 40% in the month of sales - 30% in the first month after sales - 30% in the second month after sales Total sales in May was RM30,000 and RM36,000 in June. 4. Merchandise purchases will be paid within 15 days. About 50% of the purchases are paid in the current month and another half will be paid in the following month. The ending balance of accounts payable on June 30 was RM11,700. 5. The desired ending inventory is equal to 75% of the cost of goods sold for the following month. 6. The company plans to purchase an equipment costing RM4,500 in July. 7. Dividend of RM35,000 will be declared and paid in September, if there is sufficient cash. 8. The cash balance on June 30 was RM25,000, and the company wants to have this balance maintained every month. 9. If necessary, the company will borrow money from banks and assume that bank loan and its repayment are in multiples of RM1,000. Loans are made at the beginning and repayments are at the end of month. Interest charge on loans is at 12% per year. Instructions Prepare the followings for the third quarter of the year: a. Schedule of cash collections from sales b. Purchases budget c. Schedule of cash payments for purchases d. Cash budget