In preparation for the quarterly cash budget, the revenue and cost information have been compiled as follows: Month Sales (RM) Purchases (RM) August 2018 (actual) 3,000,000 3,500,000 September 2018 (actual) 4,500,000 2,000,000 October 2018 (forecast) 1,000,000 500,000 November 2018 (forecast) 1,500,000 750,000 December 2018 (forecast) 2,000,000 1,000,000 The firm collect 60 percent of sales for cash and 40 percent of its sales one month later. Interest income of RM50,000 on marketable securities will be received in December. The firm pays the purchases of 40 percent in cash and 60 percent in following month. Salaries and wages are RM450,000 in September, RM200,000 in October, RM150,000 in November and RM225,000 in December. Sales commissions are 2 percent of the preceding month's sales. Lease payments of RM150,000 must be made each month. A principal and interest payment on an outstanding loan is due in December of RM150,000. The firm pays dividends of RM50,000 at the end of the quarter. Fixed assets costing RM700,000 and RM600,000 will be purchased in October and December. Depreciation expense each month of RM45,000. The firm has a beginning cash balance in October of RM100,000 and maintains a minimum cash balance of RM200,000. Interest on accumulated loan is at 12 percent annual interest and paid in the following month. Prepare a cash budget for the months of October, November and December 2018 based on the information given. please do not provide solution in in image format thank you!

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter4: Financial Planning And Forecasting

Section: Chapter Questions

Problem 5P

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In preparation for the quarterly cash budget, the revenue and cost information have been compiled as follows:

Month	Sales (RM)	Purchases (RM)
August 2018 (actual)	3,000,000	3,500,000
September 2018 (actual)	4,500,000	2,000,000
October 2018 (forecast)	1,000,000	500,000
November 2018 (forecast)	1,500,000	750,000
December 2018 (forecast)	2,000,000	1,000,000

The firm collect 60 percent of sales for cash and 40 percent of its sales one month later.
Interest income of RM50,000 on marketable securities will be received in December.
The firm pays the purchases of 40 percent in cash and 60 percent in following month.
Salaries and wages are RM450,000 in September, RM200,000 in October, RM150,000 in November and RM225,000 in December.
Sales commissions are 2 percent of the preceding month's sales.
Lease payments of RM150,000 must be made each month.
A principal and interest payment on an outstanding loan is due in December of RM150,000.
The firm pays dividends of RM50,000 at the end of the quarter.
Fixed assets costing RM700,000 and RM600,000 will be purchased in October and December.
Depreciation expense each month of RM45,000.
The firm has a beginning cash balance in October of RM100,000 and maintains a minimum cash balance of RM200,000.
Interest on accumulated loan is at 12 percent annual interest and paid in the following month.

Prepare a cash budget for the months of October, November and December 2018 based on the information given.

please do not provide solution in in image format thank you!

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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