Avani Goldcoast Sdn. Bhd. is estimating its need for funds for the second and third quarter of the 2020. The following table presents the forecasted monthly sales and purchases from April to October 2020: Month Sales revenue (RM) Purchases (RM) April 2020 120,000 60,000 May 2020 100,000 66,000 June 2020 110,000 72,000 July 2020 120,000 78,000 August 2020 130,000 84,000 September 2020 140,000 90,000 Additional information: (i) 20% of sales are collected in the month of sales, 50% one month after the sales and 30% two month following the month of sales. (ii) Payment for the purchases are as follow: 50% in the month of purchases, 35% one month after purchases and 15% two month after purchases. (iii) In August 2020, the company will sell an old motor vehicle having a book value of RM10,000. There will be a loss on disposal of RM4,000. (iv) Monthly fixed overhead are RM19,000 and this amount includes depreciation of RM2,000. The payment of fixed overheads is to be settled in the month they are incurred. (v) The company will receive dividend from its investment in Bursa Malaysia amounting to RM50,000 in September 2020. (xi) Opening cash balance on 1 July 2020 is expected to be RM20,000. Required: Prepare Cash Budget for the month of July, August and September 2020.
Master Budget
A master budget can be defined as an estimation of the revenue earned or expenses incurred over a specified period of time in the future and it is generally prepared on a periodic basis which can be either monthly, quarterly, half-yearly, or annually. It helps a business, an organization, or even an individual to manage the money effectively. A budget also helps in monitoring the performance of the people in the organization and helps in better decision-making.
Sales Budget and Selling
A budget is a financial plan designed by an undertaking for a definite period in future which acts as a major contributor towards enhancing the financial success of the business undertaking. The budget generally takes into account both current and future income and expenses.
Avani Goldcoast Sdn. Bhd. is estimating its need for funds for the second and third quarter of the 2020.
The following table presents the
|
Month |
Sales revenue (RM) |
Purchases (RM) |
|
April 2020 |
120,000 |
60,000 |
|
May 2020 |
100,000 |
66,000 |
|
June 2020 |
110,000 |
72,000 |
|
July 2020 |
120,000 |
78,000 |
|
August 2020 |
130,000 |
84,000 |
|
September 2020 |
140,000 |
90,000 |
Additional information:
(i) 20% of sales are collected in the month of sales, 50% one month after the sales and 30% two month following the month of sales.
(ii) Payment for the purchases are as follow: 50% in the month of purchases, 35% one month after purchases and 15% two month after purchases.
(iii) In August 2020, the company will sell an old motor vehicle having a book value of RM10,000. There will be a loss on disposal of RM4,000.
(iv) Monthly fixed overhead are RM19,000 and this amount includes
(v) The company will receive dividend from its investment in Bursa Malaysia amounting to RM50,000 in September 2020.
(xi) Opening cash balance on 1 July 2020 is expected to be RM20,000.
Required:
Prepare
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