Mr. Osman Jailani has been working for a textile manufacturing company for the past 25 years....

 

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Mr. Osman Jailani has been working for a textile manufacturing company for the past 25 years. At his present age of 50, he decided to venture his own trading business called OJay Sdn Bhd starting 1st January 2021. He provides you with the following information: 1. Osman started his business with his saving money of RM4,200. 2. Osman was promised sales orders amounting to RM54,000 and RM90,000 respectively for the first two quarters of 2021. The sales are assumed to be evenly distributed throughout the months in that quarter. 3. He will order inventory of goods costing RM40,000 as a starting inventory which have to be delivered in December 2020 if the business is to start in January 2021. 4. The goods will be sold, on average, at a gross profit margin of 20% 5. A delivery van will be purchased and paid for in January 2021 for RM12,000. It is expected to last for 5 years and be worth about RM4,000 at the end of that period. Straight line depreciation method will be used for depreciation calculation. 6. Osman will arrange for monthly supplies of goods sufficient to replace items sold. The supplier will allow two-month credit for all supplies, including the initial stocks to be delivered in December 2020. He will offer similar credit period to his customers. 7. He will conduct most of his business from home but will rent a warehouse to store the goods. He will pay 2 years rent of RM5,400 payable half yearly in equal amounts for the two years commencing January 2021. 8. One Sales Executive will be employed on an annual salary of RM3,600 payable monthly. 9. Telephone bill which is at present RM150 per quarter which he will continue to pay privately will rise to RM400 per quarter as a result of running the business from home. 10. Miscellaneous expenses are estimated at RM250 per quarter payable in cash. 11. Osman want to maintain the business cash of at least RM2000 on hand at the end of each quarter. 12. Osman will require his bank to meet all his other cash needs if the business do not have enough cash to run its operation. Borrowing will be done at the beginning of the quarter and paid at the end of a quarter when there is access of money. The interest rate is at 8% per annum. Repayment will be made in multiple of 1000 together with it interest. REQUIRED: Prepare a cash budget for each of the first two quarters of 2021 for O-Jay Sdn Bhd Mr. Osman Jailani has been working for a textile manufacturing company for the past 25 years. At his present age of 50, he decided to venture his own trading business called OJay Sdn Bhd starting 1st January 2021. He provides you with the following information: 1. Osman started his business with his saving money of RM4,200. 2. Osman was promised sales orders amounting to RM54,000 and RM90,000 respectively for the first two quarters of 2021. The sales are assumed to be evenly distributed throughout the months in that quarter. 3. He will order inventory of goods costing RM40,000 as a starting inventory which have to be delivered in December 2020 if the business is to start in January 2021. 4. The goods will be sold, on average, at a gross profit margin of 20% 5. A delivery van will be purchased and paid for in January 2021 for RM12,000. It is expected to last for 5 years and be worth about RM4,000 at the end of that period. Straight line depreciation method will be used for depreciation calculation. 6. Osman will arrange for monthly supplies of goods sufficient to replace items sold. The supplier will allow two-month credit for all supplies, including the initial stocks to be delivered in December 2020. He will offer similar credit period to his customers. 7. He will conduct most of his business from home but will rent a warehouse to store the goods. He will pay 2 years rent of RM5,400 payable half yearly in equal amounts for the two years commencing January 2021. 8. One Sales Executive will be employed on an annual salary of RM3,600 payable monthly. 9. Telephone bill which is at present RM150 per quarter which he will continue to pay privately will rise to RM400 per quarter as a result of running the business from home. 10. Miscellaneous expenses are estimated at RM250 per quarter payable in cash. 11. Osman want to maintain the business cash of at least RM2000 on hand at the end of each quarter. 12. Osman will require his bank to meet all his other cash needs if the business do not have enough cash to run its operation. Borrowing will be done at the beginning of the quarter and paid at the end of a quarter when there is access of money. The interest rate is at 8% per annum. Repayment will be made in multiple of 1000 together with it interest. REQUIRED: Prepare a cash budget for each of the first two quarters of 2021 for O-Jay Sdn Bhd

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Answer Step by Step Explanation Cash Budget The requirement is to prepare a cash budget for the firs... View the full answer