From the following information prepare a monthly cash budget for the three months ending 31st Dec.2020 Sales Materials Wages Production Admin. Selling, etc Month (RM) (RM) (RM) (RM) (RM) June 6,000 3,600 1,300 450 320 July 6,500 4,000 1,500 450 320 Aug. 7,000 4,800 1,500 500 350 Sen. 7.500 4.500 1.500 600 350
From the following information prepare a monthly cash budget for the three months ending 31st Dec.2020 Sales Materials Wages Production Admin. Selling, etc Month (RM) (RM) (RM) (RM) (RM) June 6,000 3,600 1,300 450 320 July 6,500 4,000 1,500 450 320 Aug. 7,000 4,800 1,500 500 350 Sen. 7.500 4.500 1.500 600 350
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Concept explainers
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.
Question
Transcribed Image Text:Question 1
From the following information prepare a monthly cash budget for the three months ending
31st Dec.2020
Sales
Materials
Wages
Production
Admin. Selling, etc
Month
(RM)
(RM)
(RM)
(RM)
(RM)
June
6,000
3,600
1,300
450
320
July
6,500
4,000
1,500
450
320
Aug.
7,000
4,800
1,500
500
350
Sep.
7,500
4,500
1,500
600
350
Oct.
8,000
4,600
1,600
600
400
Nov.
8,500
5,000
1,800
700
400
Dec.
9,000
5,200
2,000
700
450
Credit terms
Sales
3 months to debtors. 10% of sales are on cash. On an average, 50% of credit
sales are paid on the due dates while the other 50% are paid in the month following
Creditors for material – 2 months.
Lag in payment
Wages. 1/4 month, overheads
1/2 month.
Other information
Plant and Machinery to be installed in Aug. at a cost of RM30,000. It will be paid for by
monthly installments of RM1,000 each from 1st Oct.;
Preference share dividend @ 6% on RM100,000 are to be paid on 1st Dec.
Calls on 500 equity shares @ RM2 per share expected on 1st November;
Dividends from investments amounting to RM500 are expected on 31st Dec.;
Income tax (advance) to be paid in December RM 1,000
Cash and Bank Balance on 1st Oct. expected RM3,000.
Required:
Prepare cash budget for 3 months period ending 31st December 2020 in detail with
appropriate workings.
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