The following data is available from the various functional budgets prepared at Nur Ika Enterprise for the year 2022: February RM *000 March RM *000 72 640 January RM '000 April RM "000 |Cash sales Credit sales Purchases for resale Salaries and wages Overhead expenses 128 84 760 560 90 1,140 800 880 520 320 248 266 280 238 160 150 160 140 Other information is available as follows: (1) 5% of all sales on credit are expected to become bad debts. Receipts from credit customers are due in the following sales. (ii) All goods are bought on credit from suppliers who allow 2.5% cash discount for payment in the month following purchase. (iii) Salaries and wages are paid in the month they are earned. (iv) Payments for overhead expenses are made in the month the expenses are incurred. The above overhead budget includes RM28,000 per month for depreciation. V) Purchase two new vans, costing RM21,000 each, are to be paid in April. vi) Rental for new office amounting RM175,000 is to be paid in March. vii) The balance at the bank at the start of February is expected to be RM220,000. Required: Prepare a monthly Cash Budget for February, March and April showing the bank balance at each end of the month. a)
The following data is available from the various functional budgets prepared at Nur Ika Enterprise for the year 2022: February RM *000 March RM *000 72 640 January RM '000 April RM "000 |Cash sales Credit sales Purchases for resale Salaries and wages Overhead expenses 128 84 760 560 90 1,140 800 880 520 320 248 266 280 238 160 150 160 140 Other information is available as follows: (1) 5% of all sales on credit are expected to become bad debts. Receipts from credit customers are due in the following sales. (ii) All goods are bought on credit from suppliers who allow 2.5% cash discount for payment in the month following purchase. (iii) Salaries and wages are paid in the month they are earned. (iv) Payments for overhead expenses are made in the month the expenses are incurred. The above overhead budget includes RM28,000 per month for depreciation. V) Purchase two new vans, costing RM21,000 each, are to be paid in April. vi) Rental for new office amounting RM175,000 is to be paid in March. vii) The balance at the bank at the start of February is expected to be RM220,000. Required: Prepare a monthly Cash Budget for February, March and April showing the bank balance at each end of the month. a)
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
The following data is available from the various functional budgets prepared at Nur Ika
Enterprise for the year 2022:
January
RM '000
February
RM '000
March
RM '000
April
RM 000
Cash sales
128
84
72
90
Credit sales
640
1,140
880
760
800
Purchases for resale
Salaries and wages
Overhead expenses
560
520
320
266
280
238
248
160
150
160
140
Other information is available as follows:
(1)
5% of all sales on credit are expected to become bad debts. Receipts from
credit customers are due in the following sales.
All goods are bought on credit from suppliers who allow 2.5% cash discount for
payment in the month following purchase.
(ii)
(iii)
Salaries and wages are paid in the month they are earned.
(iv) Payments for overhead expenses are made in the month the expenses are
incurred. The above overhead budget includes RM28,000 per month for
depreciation.
Purchase two new vans, costing RM21,000 each, are to be paid in April.
(v)
(vi)
Rental for new office amounting RM175,000 is to be paid in March.
(vii) The balance at the bank at the start of February is expected to be RM220,000.
Required:
Prepare a monthly Cash Budget for February, March and April showing the
bank balance at each end of the month.
(a)
(b)
List TWO (2) benefits from the use of monthly cash budgets.
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