September 2022 Final Examination Question 3 CONFIDENTIAL Sofea Catering Supply sells various equipment and supplies to restaurants in the local and surrounding communities. The company's executive, Mr. Rayyan, has requested your help in preparing a cash budget for the month of January. Mr. Rayyan accumulated the following information for you: i. The cash balance on January 1 was estimated to be RM50,000. ii. Actual sales of November and December and budgeted sales for January are as follows: November (RM) Cash Sales 85,000 December (RM) 103,000 January (RM) 112,000 Credit Sales 210,000 250,000 310,000 Total Sales 295,000 353,000 422,000 iii. Credit sales are collected over a two-month period. With 60% being collected in the first month and the remainder being collected in the second month. iv. Inventory purchased are expected to be RM230,000 in January. The company pays for inventory purchases in the month following purchase. The balance of December's purchase is RM412,000 v. Selling and administrative expenses are budgeted to be RM84,000 for January. Of that amount, 40% is depreciation. vi. Equipment costing RM85,000 will be purchased in January by cash. vii. Dividends in the amount of RM22,000 will be paid. viii. The company wants to maintain a minimum cash balance of RM50,000 and has set up a line of credit at the local bank that can be used to cover any shortage. If the company must borrow, the loan will be made at the beginning of the month and any repayment will be made in the next following month. Required: a. Prepare a schedule of collection for the month of January. b. Prepare cash budget for the month of January. (5 marks) (20 marks) (Total: 25 Marks)