In: Accounting
Question 1
Delicious Catering Supply sells various equipment and supplies to
restaurants in the local and surrounding communities. The company’s
executive, Encik Haziq Azim, has requested your help in preparing a
cash budget for the month of May & June. Encik Haziq Azim
accumulated the following information for you:
i. The cash balance at May 1 was estimated to be RM80,000.
ii. Actual sales of April and May and budgeted sales for June are
as follows:
April
RM May
RM June
RM
Cash sales 120,000 110,000 105,000
Credit sales 180,000 240,000 300,000
Total sales 300,000 350,000 405,000
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. The purchases are made of 70% total sales for the current
month. All purchases are paid in full in the same month of
purchases.
v. Selling and administrative expenses are budgeted to be RM50,000
for each month which are included RM500 of depreciation.
vi. Equipment costing RM90,000 will be purchased in June by
cash.
vii. Dividends of RM21,000 will be paid out in June.
Required:
a) Explain the THREE (3) main advantages of
budgeting.
b) Prepare a schedule of collection for the month of May &
June.
c) Prepare a schedule of payment for the month of May &
June.
d) Prepare cash budget for the month of May &
June.