A Finance Department of Everlasting Company is required to prepare a cash budget for the second...

 

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A Finance Department of Everlasting Company is required to prepare a cash budget for the second quarter of 2022. The following are several information and assumptions in preparing the cash budget Month February March April May June July Total Sales (RM) Total Purchases (RM) 75,000 25,000 80,000 90,000 85,000 95,000 92,000 28.000 35,000 26,000 37,000 28,000 a) The customers make cash payment for 30 percent of sales value in the month of sale and the balance is made through credit sales. From the balance 40 percent will be collected a month after the sales and 60 percent will be collected two months after the sales. b) Payments are paid 50 percent in the month of purchase; 30 percent will be paid one month after the purchase and the balance will be paid two months after the purchase c) The company makes a monthly payment of RM20,000 for wages and RM15,000 for building rental. d) Rental payment on machines and equipment is RM30,000, received at the end of each quarter and the depreciation value is RM4,000 per month. e) Other monthly commitments are: i) Selling and administrative expenses : RM5,000 ii) Insurance premium RM3,000 1) The company receives a dividend of RM20,000 for the first month of each quarter. g) Opening cash balance is RM15,000 and a minimum cash balance of RM20,000 must be maintained at all times. h) Interest rate of 12 percent per annum will be charged if the company secures a loan from a bank. A Finance Department of Everlasting Company is required to prepare a cash budget for the second quarter of 2022. The following are several information and assumptions in preparing the cash budget Month February March April May June July Total Sales (RM) Total Purchases (RM) 75,000 25,000 80,000 90,000 85,000 95,000 92,000 28.000 35,000 26,000 37,000 28,000 a) The customers make cash payment for 30 percent of sales value in the month of sale and the balance is made through credit sales. From the balance 40 percent will be collected a month after the sales and 60 percent will be collected two months after the sales. b) Payments are paid 50 percent in the month of purchase; 30 percent will be paid one month after the purchase and the balance will be paid two months after the purchase c) The company makes a monthly payment of RM20,000 for wages and RM15,000 for building rental. d) Rental payment on machines and equipment is RM30,000, received at the end of each quarter and the depreciation value is RM4,000 per month. e) Other monthly commitments are: i) Selling and administrative expenses : RM5,000 ii) Insurance premium RM3,000 1) The company receives a dividend of RM20,000 for the first month of each quarter. g) Opening cash balance is RM15,000 and a minimum cash balance of RM20,000 must be maintained at all times. h) Interest rate of 12 percent per annum will be charged if the company secures a loan from a bank.

Answer rating: 100% (QA)

February Sales 75000 Credit sales 75000 x 07 52500 Collections 30 of sales in m... View the full answer