Tutorial Question (Part 2)

Cash Budget
Prepared by: Nurul Fathiyah Bt Kamarul Bahrin

1. A company wants to arrange overdraft facility from the banks started from April to June. Prepare
cash budget from the following:

Month Sales (RM) Purchase (RM) Wages (RM)

February 180000 124000 12000
March 192000 144000 14000
April 108000 243000 11000
May 174000 246000 10000
June 126000 268000 15000

Additional Information:

I. 50% of credit sales is realized in the month following the sales and other 50% in the second
month of the following.
II. Wages are paid out at the end of respective month.
III. Creditors are paid in the month following the month of purchase.
IV. Cash at the bank on 1st April; RM25,000.
V. Income tax payable RM30,000 in June.
VI. Dividend payable RM30,000 in February.

2. Sale for Blue Bill Corporation are projected as follows for the month of June through
November,2019.

Month Sales
June 250000
July 250000
August 300000
September 350000
October 550000
November 175000

Additional Information:

I. Credit sales account for 55% of the monthly sales are collected one month after sale
II. Other receipt for October is RM45,000
III. Variable disbursement is 50% of sales each month.
IV. Fixed disbursement is RM8000 each month
V. RM65,000 should be include in August for taxes.
VI. The company is obligated to make Rm320,000 debt repayment in November.
VII. Designed ending cash each month is RM5000.
 VIII. Beginning cash in June is RM20,000.

3. Prepare cash budget for the first quarter of the year 20X2.

20X1 (RM) 20X2(RM)

October November December Jan Feb March April
2000 2500 3200 2000 3000 2500 3500

Additional Information:

I. Cash sales are 50% of the total sales with 60% of the balance are collected one month after
and 40% two months after sales.
II. Purchases of material or COGS are respectively 40% of sales and are made 1 month before
sales. Material of purchases are 50% cash and the balance are paid equally on the next two
months.
III. Other fixed monthly expenses are:
 Depreciation RM300
 Rental RM400
 Selling and Administration RM200
 Interest on LID RM100
IV. The company also plan to acquire new machine worth RM23,000 in January to increase its
operating efficiency. It is agreed that 20% is on the cash basis and the balance will be paid in
the following month.
V. The ending cash balance for the month of December is Rm500 while cash reserve requirement
is RM500.
VI. All the short-term borrowing costs are 10% per annum.
VII. The cash reserve may consist of cash and other near cash item such as marketable securities.

4. Prepare cash budget for the third quarter of the Year 2018.

Month Actual Sales (2018)

March 2230000
April 3550000
May 2660000
June 2440000

Month Forecasted Sales (RM)

July 2230000
August 3550000
September 2660000
October 2440000
November 3900000
December 3780000
a) The collection of sales is 35% for cash, whereas the balance is collected in the following month.
b) Megah Holding purchases raw material two month in advance. Amount of new material
needed is 60% of its total sales.
c) The supplier is paid 40% in the same month in which the purchase occurs, while the balance
will be paid equally in the two months after purchase.
d) Rental received RM5,000 every month
e) Dividend of RM86,000 will be received in September.
f) Utilities expenses is 5% based on the current monthly sales.
g) The company makes monthly payment of RM85,000 for salaries and RM37,000 for other
administrative expenses.
h) The company will pay insurance premium of RM15,500 every month and taxes of RM11,000
is payable in August.
i) Ending of balance of June is RM123,000 and the company intends to maintain a minimum
balance of RM60,000 every month.
j) Interest 12% per annum per year will be charged if company makes a loan.