Question
QUESTION 4 a. Produce 101 Company has required you to construct a cash budget on the basis of following information: February RM74,000 March RM38,000 April
QUESTION 4
a. Produce 101 Company has required you to construct a cash budget on the basis of following
information:
February RM74,000
March RM38,000
April RM49,000
May RM74,000
June RM65,000
i. The company has observed that 35% of its sales is cash basis and the balance is collected
in the following month.
ii. The company's raw materials cost is 70% of sales. Usually purchases are made 1 (ONE)
month before the month of sales and paid cash. Salaries and lease payments are
RM15,000 and RM12,000 respectively.
iii. The company plans to make a cash purchase of a new van for RM60,000 and sell its
marketable securities for RM90,000 in May.
iv. The company's cash balance as of February 28, 2020 will be RM25,000. Excess cash will
be used to retire short-term borrowing (if any). Assume that the interest rate on short-term
borrowing is 1% per month. The company must have a minimum cash balance of
RM15,000 at the beginning of each month.
Construct cash budget for March, April and May 2020.
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