Bersatu Kekal Bhd is an engineering company that started a new business with an opening cash balance of RM85,000. This new business will focus on sales component parts to all potential customers located in Pasir Gudang, Johor. The following are the budgeted data of Bersatu Kekal Bhd for the year 2019. 1. In January 2019, to start a business the company has rented a double storey building for its operation at RM5,000 per month with RM20,000 rental deposit. Rental deposit is paid in January and monthly rental will be paid in the month it is incurred. 2. In February, the company is planning to purchase a machine at a cost of RM55,000 which has an estimated useful life of 10 years. Depreciation charge per annum will be RM5,500. Only half of the machine cost will be paid in the month of purchase, while the balance will be paid equally over the next two months. 3. Four (4) administration staff will be employed and each staff will be paid RM1,200 per month. Payment will be in the month in which they are incurred. 4. Purchases of materials will be made on credit. 50% of the credit purchases will be paid in the month of purchase and another 50% one month after the purchases. Estimated purchases are as follows. January RM23,000 February RM28,000 March RM25,000 April RM22,000 5. A motor van costing RM49,800 will be purchased in January. Payment of the motor van will be in six equal payments starting February 2019. 6. Estimated sales for component parts in units are: January 5,000 February 4,500 March 5,300 April 4,800 7. The selling price for the component parts is RM20. 50% of the sales are expected to be in cash whilst the other 50% is on credit. 25% discount will be given on the cash sales, while the credit sales will be collected one (1) month after sales. 8. Allowance for manager is RM1,000 per month and paid in the month incurred. 9. Monthly utilities RM850 is to be paid one month in arrears. 10. The company received 5% dividend from unit trust investment of RM500,000 in February. Required a) Prepare schedule of collection and payments for the month of January, February and March 2019. b) Prepare a cash budget for the month of January, February and March 2019.
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.
Bersatu Kekal Bhd is an engineering company that started a new business with an opening cash balance of RM85,000. This new business will focus on sales component parts to all potential customers located in Pasir Gudang, Johor. The following are the budgeted data of Bersatu Kekal Bhd for the year 2019.
1. In January 2019, to start a business the company has rented a double storey building for its operation at RM5,000 per month with RM20,000 rental deposit. Rental deposit is paid in January and monthly rental will be paid in the month it is incurred.
2. In February, the company is planning to purchase a machine at a cost of RM55,000 which has an estimated useful life of 10 years. Depreciation charge per annum will be RM5,500. Only half of the machine cost will be paid in the month of purchase, while the balance will be paid equally over the next two months.
3. Four (4) administration staff will be employed and each staff will be paid RM1,200 per month. Payment will be in the month in which they are incurred.
4. Purchases of materials will be made on credit. 50% of the credit purchases will be paid in the month of purchase and another 50% one month after the purchases. Estimated purchases are as follows.
January RM23,000
February RM28,000
March RM25,000
April RM22,000
5. A motor van costing RM49,800 will be purchased in January. Payment of the motor van will be in six equal payments starting February 2019.
6. Estimated sales for component parts in units are:
January 5,000
February 4,500
March 5,300
April 4,800
7. The selling price for the component parts is RM20. 50% of the sales are expected to be in cash whilst the other 50% is on credit. 25% discount will be given on the cash sales, while the credit sales will be collected one (1) month after sales.
8. Allowance for manager is RM1,000 per month and paid in the month incurred.
9. Monthly utilities RM850 is to be paid one month in arrears.
10. The company received 5% dividend from unit trust investment of RM500,000 in February.
Required
a) Prepare schedule of collection and payments for the month of January, February and March 2019.
b) Prepare a
Step by step
Solved in 2 steps with 6 images
