Question 2

The following information is budgeted for Hassan Sdn Bhd (HSB) for second quarter next year:

	April	May	June
Sales	RM10,000	RM30,000	RM40,000
Purchase of materials	RM50,000	RM30,000	RM20,000
Rental expenses	RM5,000	RM5,000	RM5,000
Fixed overhead	RM40,000	RM40,000	RM40,000
Variable overhead	RM2,000	RM5,000	RM5,000
Receipt- sales of used equipment Additional information:	-	RM50,000	-

1. All sales at HSB are on credit. Past experience indicates that 80% of sales will be collected in the month of sale and the remaining 20% will be collected in the following month.

2. HSB purchase all materials on credit; 90% of purchases are paid for in the month of purchase, the remaining 10% are paid for in the following month. The purchase of materials for the month of March is RM30,000.

3. Fixed overhead include depreciation of RM3,000.

4. Variable overhead and rental expenses are paid within the month they are incurred.

5. The company received 7% dividend from investment of RM60,000 in April.

6. An equipment costing RM20,000 will be purchased in May. Payment of the equipment will be in 2 equal payments starting May.

7. Opening cash balance in April is RM100,000.

Required:

1. Prepare a schedule of collections and schedule payments of materials for the month of April, May and June.

2. Prepare a cash budget for the months of April, May, and June.

(8 marks)

(17 marks)

(Total:25 Marks)