QUESTION 1 The Cooking House (CH) is a retailer of a wide range of kitchen and dining room items, such as coffee makers, silverware and table linens. The followings are extracts of the Sales Budget for the four months in 2019 and Statement of Financial Position as at 31 March 2019: Extract of Sales Budget Year 2019 April Sales (RM) 50,000 May 80,000 June July 60,000 50,000 On average, 60% of sales are cash sales and the remaining 40% are credit sales. CH offers the retailers and agents to settle the credit sales in two months: 50% in the months following the sale and the remaining 50% in the second month following the sale. Sales in February and March were RM40,000 and RM60,000 respectively. Extract of Statement of Financial Position as at 31 March 2019 Current Assets Cash Accounts receivables Merchandise inventory Fixed Assets Equipment Accumulated depreciation Current liability and Owners' Equity Accounts payables RM 10,000 32,000 48,000 37,000 12,800 16,800 For purchases of merchandise items, CH pays 50% of each month's purchases during the month of purchase. Therefore, the accounts payable balance on 31 March is 50% of March's purchases. The company pays fixed wages of RM2,500 and commissions equal to 15% of sales each month. CH also plans to purchase new fixtures for RM3,000 cash in April. Other monthly operating expenses which the company incurs are as follows: Miscellaneous expenses Rent Insurance 5% of sales RM2,000 RM200 Depreciation, including new fixture RM500 CH struggles to come up with cash to pay for purchases and operating expenses. To meet cash needs, the company uses short term credit facilities from a local bank, paying them when excess cash is available. CH maintains a minimum RM10,000 cash balance at the end of each month for operating purposes and can borrow or repay credit facilities only in multiples of RM1,000. Assume CH has the credit facilities at the beginning and repayment occur at the end of the month. Also assume that the cost of the credit facilities is 1% per month and is paid in cash at the end of each month. Required: (a) Prepare the Schedule of Cash Collection for the months of April, May and June. (5 marks) (b) Prepare the Schedule of Cash Disbursement for the merchandise purchases for the months of April, May and June. (6 marks) (c) Prepare a Cash Budget for the months of April, May, June and the total for the quarter. (14 marks) 6 [Total: 25 marks]