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Produce 101 Company has required you to construct a cash budget on the basis of following

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February RM74,000

March RM38,000

April RM49,000

May RM74,000

June RM65,000

i. The company has observed that 35% of its sales is cash basis and the balance is collected

in the following month.

ii. The company’s raw materials cost is 70% of sales. Usually purchases are made 1 (ONE)

month before the month of sales and paid cash. Salaries and lease payments are

RM15,000 and RM12,000 respectively.

iii. The company plans to make a cash purchase of a new van for RM60,000 and sell its

marketable securities for RM90,000 in May.

iv. The company’s cash balance as of February 28, 2020 will be RM25,000. Excess cash will

be used to retire short-term borrowing (if any). Assume that the interest rate on short-term

borrowing is 1% per month. The company must have a minimum cash balance of

RM15,000 at the beginning of each month.

Construct cash budget for March, April and May 2020.

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