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.