Question $5$

The figures in the table below relate to HM Furnishing which is seeking your advice on its financial position. $20232024$

Expected Results Budgets

November

$($RM$)$ December

$($RM$)$ January

$($RM$)$ February

$($RM$)$ March

$($RM$)$ April

$($RM$)$

Sales $60,00070,00072,00066,00060,00068,000$

Materials $30,00035,00036,00033,00030,00034,000$

Wages $12,00014,00014,40013,20012,00013,600$

Expenses $12,60014,70015,20013,80012,70014,300$

TOTAL COSTS $54,60063,70065,60060,00054,70061,900$

NET PROFITS $5,4006,3006,4006,0005,3006,100$

You are provided with the following additional information:

$$ Each month consists of four weeks.

$20\%$ of sales are for cash, and $80\%$ on credit. Half the credit customers pay in the month following the month of the sale and the balance two months later.

$$ All purchases for materials are on credit and are paid for in the month following the month of the purchase after first deducting a $5\%$ cash discount.

$$ Wages are paid one week in arrears.

$$ Expenses which include RM$2,500$ for depreciation each month are otherwise paid in the following month.

$$ In January $2024,$ the company will purchase a new delivery van for RM$42,000$ less RM$6,000$ trade in on the old van. Payment will be made $50\%$ in the month of purchase and the balance of $50\%$ in March.

$$ The bank balance at start of January $2024$ is expected to be RM $2,800.$

$$ No stock of raw materials or finished goods is held.

Required:

Prepare the $4$ months Cash Budget from January to April $2024.(40$ marks$)$