Question 4

BCD Computers Inc. is attempting to estimate its needs for funds during the months covering the third quarter of 20XX. Pertinent information is given as follows:

1. Past estimated future sales for 20XX are:

April RM80000 July RM90000

May RM95000 August RM130000

June RM70000 September RM110000

October RM140000

2. Rent expense is RM2500 per month
3. A quarterly interest payment on RM100000 in 7% notes payable is to be paid during September 2020.
4. Wages and salaries estimated as follows:

July RM8000

August RM10000

September RM12000

5. Payments are made within the month in which the wages are earned.
6. 60% of the sales are for cash, with the remaining collected in the month following the sale.
7. BCD pays 80% of the sales price for the merchandise and makes payment in the same month in which the sales occur, although purchases are made in the month prior to the anticipated sales.
8. BCD plans to pay RM7500 in cash for a new forklift truck in July
9. Short term loan can be obtained in the end of each month at 13% annual interest with interest paid during each month for which the loan is outstanding.
10. BCDs ending cash balance for June 30, 20XX is RM67000; the minimum balance the firm wishes to have in any month is RM35000

REQUIRED: Set up a cash budget for BCD for the quarter ended September 30, 20XX