Avani Goldcoast Sdn. Bhd. is estimating its need for funds for the second and third quarter of the 2020.   The following table presents the forecasted monthly sales and purchases from April to October 2020:   Month Sales revenue (RM) Purchases (RM) April  2020 120,000 60,000 May 2020 100,000 66,000 June 2020 110,000 72,000 July 2020 120,000 78,000 August 2020 130,000 84,000 September 2020 140,000 90,000   Additional information:              (i)      20% of sales are collected in the month of sales, 50% one month after the sales and 30% two month following the month of sales.    (ii)     Payment for the purchases are as follow: 50% in the month of purchases, 35% one month after purchases and 15% two month after purchases.    (iii)    In August 2020, the company will sell an old motor vehicle having a book value of RM10,000. There will be a loss on disposal of RM4,000.   (iv)     Monthly fixed overhead are RM19,000 and this amount includes depreciation of RM2,000. The payment of fixed overheads is to be settled in the month they are incurred.       (v)      The company will receive dividend from its investment in Bursa Malaysia amounting to RM50,000 in September 2020.   (xi)   Opening cash balance on 1 July 2020 is expected to be RM20,000.                     Required:   Prepare Cash Budget for the month of July, August and September 2020.

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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Avani Goldcoast Sdn. Bhd. is estimating its need for funds for the second and third quarter of the 2020.

 

The following table presents the forecasted monthly sales and purchases from April to October 2020:

 

Month

Sales revenue (RM)

Purchases (RM)

April  2020

120,000

60,000

May 2020

100,000

66,000

June 2020

110,000

72,000

July 2020

120,000

78,000

August 2020

130,000

84,000

September 2020

140,000

90,000

 

Additional information:

 

           (i)      20% of sales are collected in the month of sales, 50% one month after the sales and 30% two month following the month of sales.

 

 (ii)     Payment for the purchases are as follow: 50% in the month of purchases, 35% one month after purchases and 15% two month after purchases.

 

 (iii)    In August 2020, the company will sell an old motor vehicle having a book value of RM10,000. There will be a loss on disposal of RM4,000.

 

(iv)     Monthly fixed overhead are RM19,000 and this amount includes depreciation of RM2,000. The payment of fixed overheads is to be settled in the month they are incurred.

 

 

 

(v)      The company will receive dividend from its investment in Bursa Malaysia amounting to RM50,000 in September 2020.

 

(xi)   Opening cash balance on 1 July 2020 is expected to be RM20,000.

         

          Required:

 

Prepare Cash Budget for the month of July, August and September 2020.

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