BUDGETING :CASH BUDGET

The following data of Farmville enterprise shows the financial estimates from December 2019 to March
2020:

DEC JAN FEB MARCH

MONTH
(RM) (RM) (RM) (RM)
Sales (RM) 30,000 40,000 21,500 45,000
Purchases (RM) 18,000 17,500 20,000 20,000
Overheads (RM) 17,000 19,000 18,000 15,000

Additional Information:

1. 10% of the sales are cash sales

2. 50% of debtors pay one month after sales while the balance will pay in the month after
3. Creditors are paid as follows 60% in the month of purchases and the remaining 40% paid in one
month after purchases
4. Overhead includes RM1,000 depreciation per month. Overheads are settled in the month
incurred
5. Wages and salaries are estimates to be RM10,000 per month and are paid one month in arrears
6. The company are expected to receive an interest of RM5,000 in March
7. In Feb 2020, the company will buy a new motor vehicles for RM40,000. The old motor vehicles
will be trade in of RM25,000
8. At the end of each month, RM15,000 will be deposited in the bank account
9. Opening cash balance is RM65,000

Required:

i. Prepare schedule for expected cash collections from customer for the month
of Jan, Febt and March.

ii. Prepare schedule for payment of materials for the month of jan, feb and
March .

iii. Prepared the cash budget for the month of JAN,FEB and MARCH
QUESTION 2

Given below is the operational budget for Wandee sdn Bhd from January to June 2020:

JAN FEB MARCH APRIL MAY JUNE

Sales (unit) 20,500 19,500 16,500 18,000 18,500 19,000
Purchases (RM) 310,000 150,000 200,000 230,000 280,000 210,000
Wages (RM) 150,000 155,000 140,000 160,000 150,000 150,000
Overhead (RM)
Production 50,000 62,500 56,250 75,000 80,000 47,000
Administration 30,000 37,500 33,750 45,000 42,000 34,000
Selling 10,000 12,500 11,250 15,000 23,000 13,000

Additional information:

a) Selling price is RM40 per unit. 10% of the sales are cash sales and the remaining sales are credit
sales.
b) 50% of the debtors will pay at the end of the month of sales and another 45% of debtors will pay
the next month and the remaining will be uncollectable.
c) All purchases are on credit and the payment to creditors will be as follows : 50% in the month
following the purchases and the balance will paid two months after the purchases.
d) 75% of wages paid in the month incurred while the balance will be paid on the first week of the
following month
e) The production overhead costs are inclusive of depreciation on machinery amounted to
RM12,000 per month and are settled in the month incurred. While other overhead costs will be
paid one month in arrears.
f) In February 2020, the company sells a motor van which was bought in 2019 at a cost of
RM54,000. The accumulated depreciation of the motor van is RM18,900 and a loss on disposal
of RM4,100 is expected. Cash received from the sales of the motor van will be used as down
payment for buying a new lorry costing RM70,000. It is agreed that the remaining cost of the
lorry will be settled by installment for 60 months. First installment payment will start in April
2020.
g) The opening bank balance is an overdraft of RM50,000

Required:
i. Prepare schedule for expected cash collections from customer for the month
of April, May and June .

ii. Prepare schedule for payment of materials for the month of April, May and
June .
 iii. Prepared the cash budget for the month of April, May and June
Question 3

Glory Sdn Bhd manufactures organic fertilizer for local market. Madam Wana , the account
officer is now busy with the preparation of the company’s cash budget for the year 2020. The
following information is available for this purpose:
RM
i. Sales April 60,000
May 62,500
June 70,500
July 80,300

RM
ii. Purchases Feb 40,000
March 45,000
April 32,200
May 21,500
June 30,500
July 25,500

Additional information:

a. On average, 30% are cash and 70% of total sales are on credit. Of the credit sales that
90% will be collected in the month of sale, and the remaining 10% will be collected in the
following month.
b. Payment to suppliers will be made in two equal installments, the first installment will be
paid two months after purchases and the balance the month after.

c. Overheads (RM) that will be paid in the month incurred:

RM
May 2,000
June 1,500
July 3,000

d. The company will take up a loan amounting RM 50,000 on May to finance a project.
e. At the end of each month, RM30,000 will be deposited in the bank account
f. A machinery costing RM35,000 will be bought in September, RM15,000 will be
paid in cash whilst the balance in the month after. Depreciation will be 10% p.a
on cost.
g. In the month of June a doubtful debt is likely to be recovered amounting to
 RM4,500.

h. In May, one customer has returned goods worth RM2,350 and the company would be
returned back cash to customer as the same amount as the good returned in the same
month.
i. Opening cash balance in April is RM21,500.

Required:

a. Prepare schedule for expected cash collections from customer for the month of April,
May and June.

b. Prepare schedule for payment of materials for the month of April, May and June.

c. Prepare a cash budget for the months of April, May and June.

Question 4

AJWadia Bhd is a distributor of quality exclusive home grass, such as “elymus, “ Carex and Milium to
nurseries all over the country. Madam lily, the accountant is now busy with the preparation of the
company’s cash budget for the last quarter of 2019. The following information is available for this
purpose.

Sales (RM)
July 130,000
August 150,000
September 120,000
October 110,000
November 98,000
December 140,000

Additional information
a. 15% of monthly sales are for cash, 70% of all credit sales are collected one month after the
sales while the remaining are collected two months after the sales
b. Purchases in any given month are made to meet 95% of the sales of the following month
c. All purchases are on credit terms and payments to creditors will be made two (2) months after
purchased
d. Selling and distribution expenses represent 12% of monthly sales and are paid in the month of
they are incurred
e. Administrative expenses comprise of 6% of monthly sales and are paid in the month they are
incurred. Monthly depreciation of RM1,000 is included in the administrative expenses
f. The company plans to purchases a van costing RM45,000 which will be fully financed by hire
purchases. The hire purchases financing will be repaid over the next three years by RM3,000
equal monthly installment commencing from 1 June 2019
g. The company plans to sell an old machine for RM3,000 in October and expects to receive the
payment in two equal monthly payment installments beginning from the month of sale
h. The company will receive a dividend from its installment in Bursa Malaysia amounting to
RM55,000 in December 2019
i. Opening cash balance on 1 october 2019 is expected to be RM50,000

Required ;

i. Prepare schedule for expected cash collections from customer for the month
of October to December.

ii. Prepare schedule for payment of materials for the month of October to
December .

iii. Prepared the cash budget for the month of October to December