OCTOBER 2021 / MAC301 / MAC2073 Question 4 Usman, the senior management accountant of Baiduri Sdn Bhd has been requested by top management to assist the budget committee in preparing the cash projection for the months of July to September 2022. The information relating to the projected cash flows are as follows: June Cash sales Credit sales Purchases Production overhead May (RM) 48,450 480,460 134,500 (RM) 55,680 350,300 224,000 July (RM) 54,990 440,750 118,000 August (RM) 44,740 580,550 September (RM) 62,630 530,220 232,000 284,800 85,700 78,990 72,600 65,870 77,880 Administration 44,780 40,320 42,650 48,720 46,940 overhead Wages and salaries 40,800 40,720 42,880 41,930 44,440 Additional information: i. Cash balance at end of June 2022 is expected to be RM89,800. It is estimated that 40% of the debtors will pay in one month after the sales. In order to encourage early payment, the company offers a cash discount of 5% of the amount paid. The remaining 60% of the credit sales will be collected two months after sales with no discount. ii. iii. 20% of the purchases will be paid on time with discount received of 2% from the creditor while the remaining balances will be paid in one month after the purchases. iv. Dividend of RM52,800 is to be paid to all shareholders of Baiduri Sdn Bhd in July 2022. V. Bonus of RM148,550 will be paid in September 2022. Included in the production overhead is depreciation of plant and machinery of RM10,000 per month, whereas in the administration overhead is depreciation of office equipment of RM5,000 per month. vi. vii. Payments for production and administration overheads are respectively made two months and one month after the overheads are incurred. viii. Wages and salaries are normally paid in the month they are incurred. Required: а) Prepare a cash budget for the months of July, August and September 2022. (All answers must be rounded up to the nearest RM) b) Explain TWO (2) advantages of cash budget.
OCTOBER 2021 / MAC301 / MAC2073 Question 4 Usman, the senior management accountant of Baiduri Sdn Bhd has been requested by top management to assist the budget committee in preparing the cash projection for the months of July to September 2022. The information relating to the projected cash flows are as follows: June Cash sales Credit sales Purchases Production overhead May (RM) 48,450 480,460 134,500 (RM) 55,680 350,300 224,000 July (RM) 54,990 440,750 118,000 August (RM) 44,740 580,550 September (RM) 62,630 530,220 232,000 284,800 85,700 78,990 72,600 65,870 77,880 Administration 44,780 40,320 42,650 48,720 46,940 overhead Wages and salaries 40,800 40,720 42,880 41,930 44,440 Additional information: i. Cash balance at end of June 2022 is expected to be RM89,800. It is estimated that 40% of the debtors will pay in one month after the sales. In order to encourage early payment, the company offers a cash discount of 5% of the amount paid. The remaining 60% of the credit sales will be collected two months after sales with no discount. ii. iii. 20% of the purchases will be paid on time with discount received of 2% from the creditor while the remaining balances will be paid in one month after the purchases. iv. Dividend of RM52,800 is to be paid to all shareholders of Baiduri Sdn Bhd in July 2022. V. Bonus of RM148,550 will be paid in September 2022. Included in the production overhead is depreciation of plant and machinery of RM10,000 per month, whereas in the administration overhead is depreciation of office equipment of RM5,000 per month. vi. vii. Payments for production and administration overheads are respectively made two months and one month after the overheads are incurred. viii. Wages and salaries are normally paid in the month they are incurred. Required: а) Prepare a cash budget for the months of July, August and September 2022. (All answers must be rounded up to the nearest RM) b) Explain TWO (2) advantages of cash budget.
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.
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Transcribed Image Text:OCTOBER 2021 / MAC301 / MAC2073
Question 4
Usman, the senior management accountant of Baiduri Sdn Bhd has been requested by top
management to assist the budget committee in preparing the cash projection for the months
of July to September 2022. The information relating to the projected cash flows are as follows:
May
(RM)
48,450
480,460
134,500
June
Cash sales
Credit sales
Purchases
Production
(RM)
55,680
350,300
224,000
July
(RM)
54,990
440,750
118,000
August
(RM)
44,740
580,550
284,800
September
(RM)
62,630
530,220
232,000
85,700
78,990
72,600
65,870
77,880
overhead
Administration
overhead
44,780
40,320
42,650
48,720
46,940
Wages and
salaries
40,800
40,720
42,880
41,930
44,440
Additional information:
i.
Cash balance at end of June 2022 is expected to be RM89,800.
It is estimated that 40% of the debtors will pay in one month after the sales. In order to
encourage early payment, the company offers a cash discount of 5% of the amount paid.
The remaining 60% of the credit sales will be collected two months after sales with no
discount.
i.
20% of the purchases will be paid on time with discount received of 2% from the creditor
while the remaining balances will be paid in one month after the purchases.
ii.
iv.
Dividend of RM52,800 is to be paid to all shareholders of Baiduri Sdn Bhd in July 2022.
V.
Bonus of RM148,550 will be paid in September 2022.
Included in the production overhead is depreciation of plant and machinery of RM10,000
per month, whereas in the administration overhead is depreciation of office equipment
of RM5,000 per month.
vi.
Payments for production and administration overheads are respectively made two
months and one month after the overheads are incurred.
vii.
viii. Wages and salaries are normally paid in the month they are incurred.
Required:
a)
Prepare a cash budget for the months of July, August and September 2022.
(All answers must be rounded up to the nearest RM)
b)
Explain TWO (2) advantages of cash budget.
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