Question: 1

As the Head of Finance in Indah Company, you are required to create and present a cash budget of the company for the third quarter of 2021 to the Top Management of the company.

Below are the actual sales in May and June 2021 and projected sales for July through November 2021.

2021 Amount (RM)

May 170,000

June 200,000

July 150,000

August 180,000

September 225,000

October 450,000

November 412,500

Indah Company collects 20 percent of its sales in the month of sales, 50 percent in the following month and the balance of 30 percent in two months after sales.

Indah Company purchases raw materials two months in advance which is equal to 70 percent of its monthly forecasted sales. The supplier is paid 50 percent one month after purchase and the balance in two months after purchase.

In addition, Indah Company pays RM1,500 per month for rent and RM5,000 per month for other operating expenditures. The company also provides RM3,000 for its depreciation. The salary and wage payment are based on 20 percent of the monthly sales and are paid in the month of sales. Tax prepayments of RM10,000 are made at the beginning of every quarter. Indah Company also plans to acquire additional motor vehicle which requires a down payment of RM20,000 and to be paid in August. Thereafter, the first monthly installment of RM2,500 will commence in September.

Indah Company's cash balance as at 30th June 2021 is RM18,000 and a minimum balance of RM15,000 must be maintained at all time to meet any unexpected needs.

Requirement: a. make the Cash Budget of Indah Company (including worksheets on Accounts Receivables and Accounts Payables)

b. Make a video presentation on the cash budget. Presentation time: 3 - 5 minutes.