QUESTION JTET Sdn Bhd is an automotive manufacturing company located at Hicom Industrial Park. Currently, the owner, Mr Arifin is considering to open a new branch that is located at Pontian, Johor. He has asked you to help him to prepare cash budget over the first three months of operation, starting October 2021. The following information is available: Octobe Novembe Decembe Sales Purchase 22,000 24,100 Overhead 60,000 66,000 69.000 32,200 Additional 2,650 2,500 3.600 Information: • Mr Arifin is expected to contribute RM 100,000 cash as capital in order to set up the new branch. • In October, Mr Airifin will need to pay a rental deposit of RM10,000 and monthly rental of RM5,000 for the factory building. • 1/3 of the sales are cash sales. Total credit sales are expected to be paid: • 40% in the month of sales 60% one month after sales • Overhead includes RM 650 depreciation per month and paid one month in arrears. • All purchases payment to suppliers will be paid in two equal instalments. The first instalment will be paid in the month of purchase and the remaining in the month after. • Three workers will be employed with a fixed salary of RM 2,000 per person. All of their salaries will be paid in the first day of the following month. Interest on fixed deposit is expected to be received in December amounting RM 3,000. • A machinery costing RM 90,000 will be bought in October 2021, where RM 30,000 will be paid in the month of purchase. The balance will be paid in three months equal instalment. The machine will be depreciated 10% per annum using straight line method. Required: a) Prepare a cash budget for the company for the month of October, November and December 2021.
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.
Step by step
Solved in 2 steps with 2 images