Q2. (a) Nextron Company prepares monthly cash budgets. The following data has been extracted from existing reports, and the subsidiary budgets for the two months of September and October 2022. Sales Purchases Wages Manufacturing overhead Administration expenses Sale of motor vehicle Cash paid for new machinery September RM 3,140,000 1,620,000 514,000 216,000 390,000 165,000 October RM 4,120,000 2,160,000 552,000 234,000 390,000 82,000 All sales are on credit. Collections from debtors normally have the following pattern: 60 per cent in the month of sale, 30 per cent one month later, and 10 per cent two months later. Fortunately, Nextron does not have much trouble with bad debts. Sales in June, July and August were RM2,950,000, RM2,660,000 and RM3,020,000 respectively. Purchases are paid for in the next month. Purchases in August were RM1,820,000. Manufacturing overhead includes RM125,000 for depreciation expense, while the administration expenses include an amount of RM56,000 for depreciation expenses. Both manufacturing overhead and administration expenses are paid in the same month. Nextron expects to be able to repay the principal on a RM500,000 loan in October. Required: Prepare a cash budget for two months ending 31 October 2022. The cash balance at 31 August 2022 is expected to be RM126,000.
Q2. (a) Nextron Company prepares monthly cash budgets. The following data has been extracted from existing reports, and the subsidiary budgets for the two months of September and October 2022. Sales Purchases Wages Manufacturing overhead Administration expenses Sale of motor vehicle Cash paid for new machinery September RM 3,140,000 1,620,000 514,000 216,000 390,000 165,000 October RM 4,120,000 2,160,000 552,000 234,000 390,000 82,000 All sales are on credit. Collections from debtors normally have the following pattern: 60 per cent in the month of sale, 30 per cent one month later, and 10 per cent two months later. Fortunately, Nextron does not have much trouble with bad debts. Sales in June, July and August were RM2,950,000, RM2,660,000 and RM3,020,000 respectively. Purchases are paid for in the next month. Purchases in August were RM1,820,000. Manufacturing overhead includes RM125,000 for depreciation expense, while the administration expenses include an amount of RM56,000 for depreciation expenses. Both manufacturing overhead and administration expenses are paid in the same month. Nextron expects to be able to repay the principal on a RM500,000 loan in October. Required: Prepare a cash budget for two months ending 31 October 2022. The cash balance at 31 August 2022 is expected to be RM126,000.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
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
Don't give answer in image
Transcribed Image Text:Q2.
(a)
Nextron Company prepares monthly cash budgets. The following data has
been extracted from existing reports, and the subsidiary budgets for the two
months of September and October 2022.
Sales
Purchases
Wages
Manufacturing overhead
Administration expenses
Sale of motor vehicle
Cash paid for new machinery
September
RM
3,140,000
1,620,000
514,000
216,000
390,000
165,000
October
RM
4,120,000
2,160,000
552,000
234,000
390,000
82,000
All sales are on credit. Collections from debtors normally have the following
pattern: 60 per cent in the month of sale, 30 per cent one month later, and 10
per cent two months later. Fortunately, Nextron does not have much trouble
with bad debts.
Sales in June, July and August were RM2,950,000, RM2,660,000 and
RM3,020,000 respectively. Purchases are paid for in the next month.
Purchases in August were RM1,820,000. Manufacturing overhead includes
RM125,000 for depreciation expense, while the administration expenses
include an amount of RM56,000 for depreciation expenses. Both
manufacturing overhead and administration expenses are paid in the same
month. Nextron expects to be able to repay the principal on a RM500,000 loan
in October.
Required:
Prepare a cash budget for two months ending 31 October 2022. The cash
balance at 31 August 2022 is expected to be RM126,000.
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 4 steps
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.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