Ely, Athirah, Ain, and Aimi planned to open up a cosmetic distributor outlet in Cyberjaya next year. They are in the process of assembling a cash budget for the first quarter of the year 2020. They asked you to help them to prepare a cash budget and provided you with the following information: i. They will start the business in January 2020, with RM90,000 cash as the capital. ii. They will rent a double-story building. They need to pay a rental deposit of RM50,000 in January. However, they will only start paying the rental on February at RM3,000 per month. iii. In February, they expected to purchase 5 display cabinets at the cost of RM10,000 on credit. Only half of the cost will be paid in the month of purchase while the balance will be paid in the following month. iv. They will employ 3 staff in January, and each of them will be paid RM1,600 per month. v. Purchases of cosmetics will be made on credit and payment will be made in the following month after purchasing. Estimated purchase are as follows: January RM10,000 February RM15,000 March RM20,000 vi. All sales will be made on a cash basis. Estimated cosmetics sales are: January RM30,000 February RM35,000 March RM40,000 vii. The allowance for Ely, Athirah, Ain, and Aimi will start in March. Every partner will be paid for RM4,500. viii. The advertisement expense will be paid by cheque for RM10,000 in February. 4 Required: a. Prepare a schedule that discloses the business’s total cash collections for January, February and March 2020. b. Prepare a schedule that discloses the business’s total cash payments for January, February and March 2020. c. Prepare the cash budget for January, February and March 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.
Ely, Athirah, Ain, and Aimi planned to open up a cosmetic distributor outlet in Cyberjaya next year.
They are in the process of assembling a
you to help them to prepare a cash budget and provided you with the following information:
i. They will start the business in January 2020, with RM90,000 cash as the capital.
ii. They will rent a double-story building. They need to pay a rental deposit of RM50,000 in
January. However, they will only start paying the rental on February at RM3,000 per month.
iii. In February, they expected to purchase 5 display cabinets at the cost of RM10,000 on credit.
Only half of the cost will be paid in the month of purchase while the balance will be paid in the
following month.
iv. They will employ 3 staff in January, and each of them will be paid RM1,600 per month.
v. Purchases of cosmetics will be made on credit and payment will be made in the following
month after purchasing. Estimated purchase are as follows:
January RM10,000
February RM15,000
March RM20,000
vi. All sales will be made on a cash basis. Estimated cosmetics sales are:
January RM30,000
February RM35,000
March RM40,000
vii. The allowance for Ely, Athirah, Ain, and Aimi will start in March. Every partner will be paid for
RM4,500.
viii. The advertisement expense will be paid by cheque for RM10,000 in February.
4
Required:
a. Prepare a schedule that discloses the business’s total cash collections for January, February
and March 2020.
b. Prepare a schedule that discloses the business’s total cash payments for January, February
and March 2020.
c. Prepare the cash budget for January, February and March 2020.
d. State FOUR (4) purposes of budget.
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