Question
Question 1 From the following information prepare a monthly cash budget for the three months ending 31st Dec.2020 Month Sales (RM) Materials (RM) Wages (RM)
Question 1
From the following information prepare a monthly cash budget for the three months ending 31st Dec.2020
Month | Sales (RM) | Materials (RM) | Wages (RM) | Production (RM) | Admin. Selling, etc (RM) |
June | 6,000 | 3,600 | 1,300 | 450 | 320 |
July | 6,500 | 4,000 | 1,500 | 450 | 320 |
Aug. | 7,000 | 4,800 | 1,500 | 500 | 350 |
Sep. | 7,500 | 4,500 | 1,500 | 600 | 350 |
Oct. | 8,000 | 4,600 | 1,600 | 600 | 400 |
Nov. | 8,500 | 5,000 | 1,800 | 700 | 400 |
Dec. | 9,000 | 5,200 | 2,000 | 700 | 450 |
Credit terms
Sales 3 months to debtors. 10% of sales are on cash. On an average, 50% of credit sales are paid on the due dates while the other 50% are paid in the month following
Creditors for material 2 months.
Lag in payment
Wages. 1/4 month, overheads 1/2 month.
Other information
Plant and Machinery to be installed in Aug. at a cost of RM30,000. It will be paid for by monthly installments of RM1,000 each from 1st Oct.;
Preference share dividend @ 6% on RM100,000 are to be paid on 1st Dec.
Calls on 500 equity shares @ RM2 per share expected on 1st November;
Dividends from investments amounting to RM500 are expected on 31st Dec.;
Income tax (advance) to be paid in December RM 1,000
Cash and Bank Balance on 1st Oct. expected RM3,000.
Required:
Prepare cash budget for 3 months period ending 31st December 2020 in detail with appropriate workings.
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