MFAIZ Holdings Inc. is a retailer of kitchen accessories and hardware. The company is estimating its cash requirement for upcoming months. The firm’s history and predictions of sales in 2021 and 2022 are as follows:
Additional information:
(i) The company is adopting an old sales policy whereby 55 percent of sales on cash basis. Another 30 percent is to be collected in 1 month after the sales while the remaining 15 percent is to be collected within 2 months after the sales.
(ii) The company purchases 60 percent of materials two months before the anticipated sales.
(iii) Payment of purchases are 40 percent, which is paid in 1 month following the purchases, and the remaining is to be paid in the next 2 months after purchases.
(iv) The company has estimated RM3,000 monthly for their fixed operating cost.
(v) The monthly wages and salaries are 10 percent of the monthly sales.
(vi) Rental of premises is RM5,000 per month respectively.
(vii) EPF contributions RM12,000 for February and March 2022.
(viii) The company’s initial cash balance for the month of January is RM12,000 and the company has a policy of maintaining a minimum cash requirement of RM15,000.
Based on the information provided, prepare a cash budget for the first quarter of the 2022.
