Question

One of your duty as employee of Wanlap Company is to prepare the cash budget for the
period from 1 January to 30 June 2020.

Use the following information to assist you in preparing that budget:

-80 per cent are credit sales; 80 per cent of credit sales will be collected in the next
month; 15 per cent will be collected 60 days after sales and 4 per cent more will be
collected 90 days after sales. The company had to bear one per cent of credit sales
as uncollectable debt (bad debt).

-Purchases made every month are 65 per cent of sales forecasted for the next
month. Payment for these purchases will only be made one month after purchase.

-The company intends to maintain a minimum cash balance of RM300,000. The
cash balance on 1 January is RM300,000.

-The company expects the delivery of a new machine in the month of April.
Payment of RM400,000 will be made after delivery had been done.

-Payment for tax of RM500,000 will be made in the month of March and June.

-Rental of RM100,000 per month. Other cash expenditure is 3 per cent of sales.

-The depreciation expenses are RM150,000 per month.

-Labor expenses are 10 per cent of sales for the next month.

-The company’s board of directors intends to maintain the dividend payment of
RM450,000 that will be made in the month of June.

-Sales in the month of October are RM3,000,000 and RM2,000,000 in the months
of November and December 2019 respectively.

-Sales forecast for the first seven months in the year 2020 is as follows:

Months	Sales
January February March April May June July	3,000,000 5,000,000 5,000,000 6,000,000 3,000,000 2,000,000 2,000,000

-The company will make interest payments in the month of June for RM310,000.

Prepare the following:
(A)Forecasted Cash Received schedule.

(B)Forecasted Monthly Cash Payment schedule.

(C) Cash Budget from January until 30 June 2020.

Answer 1

Based on the given data, pls find below workings: