The figures in the table below relate to HM Sdn Bhd which is seeking your advice on its financial position.

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 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. ?
• Overheads which include RM2,500 for depreciation each month are otherwise paid in the following month. ?
• In January 2021, the company will purchase a new delivery van for RM42,000 less RM6,000 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 2021 is expected to be RM 2,800. ?
• No stock of raw materials or finished goods is held

Required:

a. Prepare the 4 months Cash Budget from January to April 2021. (14 marks)

b. Advise the management concerning the financial position of the company. (6 marks)