Nazmi Shah Sdn Bhd wishes to expand its business by opening an additional two more stores and needs to apply a bank loan. Therefore, there is needed to prepare an acceptable three-month financial plan for January until March. The following are sales and purchase information: 40 percent of the sales incurred are cash sales, while the balance are credit sales and will be collected equally for the second and third month after the sales. Nazmi Shah pays 50 percent of its purchase immediately and the balance will be paid in the month after purchases. Additional information: i. Labor expenses are 10 percent of the current month’s sales. ii. Overhead expenses are recorded at RM10,000 per month. iii. Interest payments of RM8,000 are due in January and March. iv. A cash dividend of RM40,000 is scheduled to be paid in February. v. Depreciation expenses are RM10,000 per month. vi. Tax payment of RM25,000 are due in January and April. vii. Purchase a new asset of RM40,000 in January and February. Nazmi Shah ending cash balance in December is RM50,000. The minimum desired cash balance is RM50,000 per month. Any financing shortfall, Interest on accumulated loan is at 9 percent annual interest and paid in the following monthly. Based on the information given, prepare a cash budget for the months of January, February and March.
Nazmi Shah Sdn Bhd wishes to expand its business by opening an additional two more stores and needs to apply a bank loan. Therefore, there is needed to prepare an acceptable three-month financial plan for January until March. The following are sales and purchase information:
40 percent of the sales incurred are cash sales, while the balance are credit sales and will be collected equally for the second and third month after the sales. Nazmi Shah pays 50 percent of its purchase immediately and the balance will be paid in the month after purchases.
Additional information:
i. Labor expenses are 10 percent of the current month’s sales.
ii. Overhead expenses are recorded at RM10,000 per month.
iii. Interest payments of RM8,000 are due in January and March.
iv. A cash dividend of RM40,000 is scheduled to be paid in February.
v.
vi. Tax payment of RM25,000 are due in January and April.
vii. Purchase a new asset of RM40,000 in January and February.
Nazmi Shah ending cash balance in December is RM50,000. The minimum desired cash balance is RM50,000 per month. Any financing shortfall, Interest on accumulated loan is at 9 percent annual interest and paid in the following monthly.
Based on the information given, prepare a cash budget for the months of January, February and March.
Step by step
Solved in 3 steps with 1 images
