Question

3). You are required to prepare a cash budget (by filling in the gaps in the Table-A provided below) for the Lollypop Bhd for the month of July, August, and September 2019.

The company’s cash receipts and cash disbursements are provided in the table based on the amount of projected sales and the purchase (expenses) payments respectively for the month of July, August, and September.

Month	July	August	September
Cash receipts	RM127,500	RM152,500	RM145,000
Cash disbursements	RM133,000	RM142,404	RM114,000

The company plans to apply for the short-term borrowing needed and the interest on the accumulated loan is 12% per annum. In addition, it plans to repay the loan in the following month given the availability of cash.

The beginning balance in July 2019 is RM1,000 and the company must maintain a minimum cash balance of RM6,000 each month.

Table-A

	Month	July	August	September
1	Beginning cash balance	RM1,000
2	Cash receipts	RM127,500	RM152,500	RM145,000
3	Cash disbursements	RM133,000	RM142,404	RM114,000
4	Net change in cash
5	New short-term borrowing (Additional financing)
6	Interest on loan
7	Short term borrowing repaid (Financing repayment)
8	Ending cash balance
9	Minimum cash balance	(RM6000)	(RM6000)	(RM6000)
10	Cumulative surplus (Deficit)
11	Beginning short term debt
12	Change in short term debt
13	Ending short term debt (Accumulated Loan)

                                                                                                                          

THIS IS FINANCIAL MANAGEMENT SUBJECT

Answer 1

	month	July	August	September
1	Beginning cash balance	RM1,000	RM6,000	RM6,000
2	Cash receipts	RM127,500	RM152,500	RM145,000
3	Cash disbursements	RM133,000	RM142,404	RM114,000
4	Net change in cash	(RM5,500)(2-3)	RM10,096(2-3)	RM31,000(2-3)
5	New short term borrowing(Additional financing)	RM10,500	0	0
6	Interest on loan	0	[{0.12*10500}/12]= (RM105)	[{0.12*509}/12]= (RM5.09)
7	Short term borrowing repaid(Financing repayment)	0	(RM9,991)	(RM509)
8	Ending cash balance	RM6,000	RM6,000	RM36,485.91
9	Minimum cash balance	(RM6000)	(RM6000)	(RM6000)
10	Cumulative surplus (Deficit)	0	0	RM30,485.91(8+9)
11	Beginning short term debt	0	RM10,500Endg STD, July	RM509Endg STD, Aug
12	Change in short term debt	RM10,500	(RM9,991)	(RM509)
		Loan Taken( 5)	Loan Taken( 5)	Loan repaid (7)
13	Ending short term debt(STD)(Accumulated Loan)	RM10,500(11+12)	RM509(11+12)	0 (11-12)