Question

MEIMEI company. It will begin operations on July 1, 2009. The following estimates have been prepared:

Sales - cash

• July (RM) = 5,400
• August (RM) = 9,720
• September (RM) = 12,000

Sales - credit

• July (RM) = 12,600
• August (RM) = 22,680
• September (RM) = 28,000

Purchases – cash

• July (RM) = 2,000
• August (RM) =3,000
• September (RM) = 4,000

Purchases - credit

• July (RM) = 15,000
• August (RM) = 16,000
• September (RM) = 17,000

1. 80% of credit purchases are paid in the month of purchase. 20% of credit purchases are paid in the following month.
2. Non-current assets of RM10,000 are to be purchased in the month of August 2021. 50% is pay In the month of purchase and the balance in the following month.

You are to require to:

(a) Prepare a monthly cash budget, in columnar form, showing the bank balance at the

       end of each month, for July, August and September 2009.

Answer 1

Memei Company

Cash Budget for July, August & September 2009.

Receipts: July. Aug. Sept.

Cash sales: 5400. 9720. 12000.

Total Receipts: 5400. 9720. 12000.

Payments:

Cash purchases: 2000. 3000. 4000 Credit purchases: 12000. 15800. 16800.

Non-current assets: 0. 5000. 5000.

Total payments(b): 14000. 23800. 25800.

Net receipts (payments) (a-b): -8600. -13280. -13800.

Bank balance at the start: 0. 0. 0.

Bank balance at the end: -8600. -13280. -13800.