The following information is budgeted for Hana Sdn Bhd (HSB) for second quarter next year: April May June Sales RM10,000 RM30,000 RM40,000 Purchase of materials RM50,000 RM30,000 RM20,000 Rental expenses RM5,000 RM5,000 RM5,000 Fixed overhead RM40,000 RM40,000 RM40,000 Variable overhead RM2,000 RM5,000 RM5,000 Receipt- sales of used equipment - RM55,000 - Additional information: All sales at HSB are on credit. Past experience indicates that 80% of sales will be collected in the month of sale and the remaining 20% will be collected in the following month. HSB purchase all materials on credit; 90% of purchases are paid for in the month of purchase, the remaining 10% are paid for in the following month. The purchase of materials for the month of March is RM30,000. Fixed overhead include depreciation of RM3,000. Variable overhead and rental expenses are paid within the month they are incurred. The company received 7% dividend from investment of RM60,000 in April. An equipment costing RM20,000 will be purchased in May. Payment of the equipment will be in 2 equal payments starting May. Opening cash balance in April is RM160,000. Required: Prepare a cash budget for the months of April, May, and June.
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.
The following information is budgeted for Hana Sdn Bhd (HSB) for second quarter next
year:
April May June
Sales RM10,000 RM30,000 RM40,000
Purchase of materials RM50,000 RM30,000 RM20,000
Rental expenses RM5,000 RM5,000 RM5,000
Fixed
Variable overhead RM2,000 RM5,000 RM5,000
Receipt- sales of used equipment - RM55,000 -
Additional information:
- All sales at HSB are on credit. Past experience indicates that 80% of sales will be collected in the month of sale and the remaining 20% will be collected in the following month.
- HSB purchase all materials on credit; 90% of purchases are paid for in the month of purchase, the remaining 10% are paid for in the following month. The purchase of materials for the month of March is RM30,000.
- Fixed overhead include
depreciation of RM3,000.
- Variable overhead and rental expenses are paid within the month they are incurred.
- The company received 7% dividend from investment of RM60,000 in April.
- An equipment costing RM20,000 will be purchased in May. Payment of the equipment will be in 2 equal payments starting May.
- Opening cash balance in April is RM160,000.
Required:
- Prepare a
cash budget for the months of April, May, and June.
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