BioGrow Sdn. Bhd is a retail fertilizer to farmers in Jitra. The company has approached its Bankers to provide funding for next year's operations. In considering their funding application, a three - month master budget has been requested for review by the bankers. As a freelance accounting service provider, you have been approached by the management as a consultant to prepare the 1st quarter budget for the banker's consideration for its next year's (2021) operations. Below is the information as at the end of accounting year of December 2020: Details RM 23,000 55,000 698,000 98,000 48,000 60,000 400,000 20,000 120,000 Debtors Bank Fixed asset at cost Accumulated depreciation Creditors Operating expenses for December Sales for December Ending inventory Retained earnings The following additional information was also provided to assist your work. (i) Depreciation is provided at the rate of 5% on cost of non-current assets per month. (ii) Closing inventory is expected to increase by RM2000 in January from December levels. This is expected to increase by the same figure in February from the projected figure in January. It is expected that in March closing inventory is desired to be RM26,000 The company makes a profit of 25% on its sales. (iv) Operating expenses is expected to increase by 10% from that of December in January and this is projected to increase at the same growth rate until March. (v) Sales is projected to grow by 15% per month from December until March. (vi) Debtors figure at the end of the month is desired to be proportional to the sales values. (vii) Creditors value for the three months are expected to be as follows: January - RM50,000; February - RM46,000; March - RM52,000

Managerial Accounting

15th Edition

ISBN:9781337912020

Author:Carl Warren, Ph.d. Cma William B. Tayler

Publisher:Carl Warren, Ph.d. Cma William B. Tayler

Chapter8: Budgeting

Section: Chapter Questions

Problem 1E: At the beginning of the school year, Craig Kovar decided to prepare a cash budget for the months of...

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Prepare the following three-months (January to March 2021) budget as required by the bankers.

The Cash Collection Schedule for sales
The Cash Payment Schedule for purchases
The budgeted income statement
The budgeted statement of financial position/ Balance Sheet
The cash budget

Question
BioGrow Sdn. Bhd is a retail fertilizer to farmers in Jitra. The company has approached
its Bankers to provide funding for next year's operations. In considering their funding
application, a three - month master budget has been requested for review by the
bankers.
As a freelance accounting service provider, you have been approached by the
management as a consultant to prepare the 1st quarter budget for the banker's
consideration for its next year's (2021) operations.
Below is the information as at the end of accounting year of December 2020:
Details
RM
Debtors
23,000
55,000
698,000
98,000
48,000
60,000
Bank
Fixed asset at cost
Accumulated depreciation
Creditors
Operating expenses for December
Sales for December
Ending inventory
Retained earnings
400,000
20,000
120,000
The following additional information was also provided to assist your work.
(i) Depreciation is provided at the rate of 5% on cost of non-current assets per
month.
(ii) Closing inventory is expected to increase by RM2000 in January from December
levels. This is expected to increase by the same figure in February from the
projected figure in January. It is expected that in March closing inventory is
desired to be RM26,000
(iii) The company makes a profit of 25% on its sales.
(iv) Operating expenses is expected to increase by 10% from that of December in
January and this is projected to increase at the same growth rate until March.
(V) Sales is projected to grow by 15% per month from December until March.
(vi) Debtors figure at the end of the month is desired to be proportional to the sales
values.
(vii) Creditors value for the three months are expected to be as follows:
January - RM50,000; February - RM46,000; March - RM52,000
1

Definition Definition Estimate of an organization's cash flow for a future period. A cash budget forecasts future cash receipts and payments from various sources for a fiscal year. A cash budget can be created once a month or once a week to determine the organization's cash position and ensure its performance in relation to the budget. It aids in determining whether the company has enough cash and cash equivalents to meet its operational needs in the future.

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