QUESTION 3 You are an accountant executive in Seemsoon Co, a medium sized company based in Selangor. You are required to prepare a monthly cash budget for the three-month period ended 30

th June,2020. You also need to determine whether additional short- term financing is needed during the budget period. To start off, you are given the

following information by the company to allow you to prepare Seemsoons Co cash budget.

Predicted Sales RM April 250,000 May 300,000 June 350,000 Predicted Purchase RM April 106,500 May 108,750 June 117,750

Additional Information: i. Of the firms sales 50% is collected in the month of sales, 25% a month after sales, and the remaining 20% is collected two months after-sales. The remaining balance of sales is predicted to be bad debts. ii. Total sales for March amounted to RM160,000 iii. Purchases of raw materials are made one month before sales and paid one month after purchase. iv. Wages and salaries for March, April and May are RM12,000, RM12,000 and RM10,000 respectively. v. The firm pays a monthly rental of RM4,000 vi. Depreciation expense is RM12,000 annually. vii. Utilities for the firm are 2% of sales and are paid during the month incurred. viii. A tax payment of RM1,500 for the first quarter was paid in April 2020 and the second quarter in June 2020. ix. Interest on RM40,000 notes payables due in June (second quarter) is payable at an 7% annual rate in May 2020. x. The firm follows a policy of paying no cash dividends.

xi. The firms beginning cash balance for the budget period of April is RM5,000 xii. In addition, the firm is allowed to obtain credit facilities based on the deficit value with compounding interest of 6.5% xiii. 10% of the loan amount must be paid in the following month.

Required: Prepare cash budget for ABC Co for the month end of March, April and May 2020. (25 marks)