Question

Amar Products Ltd has been in business for several years. They are preparing their budget for the four months starting on 1 January 2021.

Estimated sales are:

Sales

RM

November

15,000

December

18,000

January

12,000

February

13,000

March

15,000

April

14,000

May

16,000

Purchases are made one month before sale and cost 45% of the sales value. They are paid for in cash.

All sales are on credit. It is expected that 35% will pay one month after the sale and 65% two months after the sale.

Salaries of RM6,500 will be paid each month;

Gas and electricity of RM400 per month is payable quarterly on the last day of February, May, August and November of each year, in respect of the three months ending on that day.