QUESTION 3

Desa Cemerlang Sdn Bhd has been engaged in the process of forecasting its financing needs over the next quarter and has made the following forecasts of planned cash receipts and disbursements:

a) The firm's sales of 60% is collected in the month of sale and the remaining balance will be collected equally in the following two months after sales.

b) The raw materials are 70% of sales purchased two (2) months before the sales month. The supplier is paid one month after the purchases on the cash payment basis.

c) The wages and salaries is paid based on 10% of sales in the month. The utilities for the firm is 5% of sales in the month of their incurrence.

d) Furthermore, the monthly rent expenses is RM7,000.

e) RM5,000 tax payments are to be made in the second month of each quarter.

f) A 5% annual interest on a RM500,000 term loan will be paid monthly.

g) Beginning cash balance for the budget period is RM70,000 with a minimum cash balance of RM45,000 and an increase to RM90,000 in August and RM135,000 in September.

h) Any short term financing needed to maintain the minimum cash balance should be paid off the month after the financing month with an annual interest rate of 15% per annum.

Prepare a monthly cash budget for the three-month period ended 30th September. (30 marks)

The monthly sales for the year of 2021