Kent Sdn Bhd needs to come up with a cash budget to make sure that there is sufficient cash within the company to achieve the operations in the company. Following are the information gathered from Kent Sdn Bhd: 1) The sales figures for the month are January RM 300,000, February RM 400,000 and March RM 550,000. 2) From the sales figure, only 10 percent of the customers agreed to pay immediately. Of the remaining customers, 60 percent agreed to pay one month after sales and the balance of 40 percent agreed to pay 2 months after-sales. 3) Based on the industry experience, it is known that credit sales customers of 2 percent tend not to pay due to various reasons. These are referred to as bad debts. Kent Sdn Bhd had decided to reduce the budgeted cash inflow by this percentage only with the customers who are paying 2 months after-sales. 4) The company incurs labour cost to 20 percent, material cost to 25 percent and overhead cost to 15 percent. All this cost percentage is based on sales value for each month. 5) Labour costs are being paid on weekly basis and one week in arrears. Assuming both January and February have 4 weeks while March has 5 weeks. 6) Material cost and overhead cost are paid in the month they are incurred. Included in the overhead cost is RM 10,000 monthly charge for depreciation. 7) Prepare a cash budget for January, February and March. The opening balance of January bank balance was RM 150.000
Kent Sdn Bhd needs to come up with a cash budget to make sure that there is sufficient cash within the company to achieve the operations in the company. Following are the information gathered from Kent Sdn Bhd: 1) The sales figures for the month are January RM 300,000, February RM 400,000 and March RM 550,000. 2) From the sales figure, only 10 percent of the customers agreed to pay immediately. Of the remaining customers, 60 percent agreed to pay one month after sales and the balance of 40 percent agreed to pay 2 months after-sales. 3) Based on the industry experience, it is known that credit sales customers of 2 percent tend not to pay due to various reasons. These are referred to as bad debts. Kent Sdn Bhd had decided to reduce the budgeted cash inflow by this percentage only with the customers who are paying 2 months after-sales. 4) The company incurs labour cost to 20 percent, material cost to 25 percent and overhead cost to 15 percent. All this cost percentage is based on sales value for each month. 5) Labour costs are being paid on weekly basis and one week in arrears. Assuming both January and February have 4 weeks while March has 5 weeks. 6) Material cost and overhead cost are paid in the month they are incurred. Included in the overhead cost is RM 10,000 monthly charge for depreciation. 7) Prepare a cash budget for January, February and March. The opening balance of January bank balance was RM 150.000
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
Transcribed Image Text:Kent Sdn Bhd needs to come up with a cash budget to make sure that there is
sufficient cash within the company to achieve the operations in the company.
Following are the information gathered from Kent Sdn Bhd:
The sales figures for the month are January RM 300,000, February RM
400,000 and March RM 550,000.
1)
From the sales figure, only 10 percent of the customers agreed to pay
immediately. Of the remaining customers, 60 percent agreed to pay one
month after sales and the balance of 40 percent agreed to pay 2 months
after-sales.
2)
3)
Based on the industry experience, it is known that credit sales customers
of 2 percent tend not to pay due to various reasons. These are referred to
as bad debts. Kent Sdn Bhd had decided to reduce the budgeted cash
inflow by this percentage only with the customers who are paying 2
months after-sales.
4)
The company incurs labour cost to 20 percent, material cost to 25
percent and overhead cost to 15 percent. All this cost percentage is based
on sales value for each month.
5)
Labour costs are being paid on weekly basis and one week in arrears.
Assuming both January and February have 4 weeks while March has 5
weeks.
6)
Material cost and overhead cost are paid in the month they are incurred.
7)
Included in the overhead cost is RM 10,000 monthly charge for
depreciation.
Prepare a cash budget for January, February and March. The opening balance
of January bank balance was RM 150,000.
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 2 steps with 1 images
Recommended textbooks for you
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education