QUESTION 1

Below is the information for Cendana Jutamas Sdn. Bhd.:

a)

Cendana Jutamas's Sales for the first eight months of 2020 in Ringgit Malaysia (RM)

are as follows:

January

90,000

May

300,000

February

120,000

June

270,000

March

135,000

July

225,000

April

240,000

August

150,000

10% of sales is in cash, another 60% is collected in the following month and 30% is

collected in the second month following Sales.

b)

Cendana Jutamas purchases raw materials one month before its Sales. The amount of

raw materials needed is 50% of its Sales. 50% of the purchases are paid in the month

of purchase and the balance is paid one month after the purchase.

c)

The company pays RM10,000 per month for renting purposes, RM25,000 for salaries

and RM20,000 each month for other expenditures. Depreciation is fixed at RM5,000

per month.

d)

Annual interest of RM30,000 is to be paid in May, June and July 2020.

e)

A new machine worth RM110,000 will be purchased in June in order to replace the

existing machine.

f)

The firm will receive dividends

of RM40,000 from its investment beginning of each

quarter.

g)

The firm's cash balance on 31

st

March is RM10,000 and a minimum balance of

RM10,000 is to be maintained at all times.

Instructions:

1)

Prepare a Cash Budget for Cendana Jutamas Sdn. Bhd. covering the second quarter period

of the year 2020.

2)

Discuss and recommend the Cash Management Strategy based on the cash position at the

end of each period (Surplus or Deficit).