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Styles and Malik have taken up a franchise arrangement with Borenos Chicken. The business has a bank overdraft limit of RM40,000. The following are the forecast figures for the next six (6) months: Month November December January February March April Purchases RM 40,000 50,000 30,000 40,000 60,000 60,000 Sales RM 85,000 110,000 58,000 75,000 120,000 120,000 Wages & Salaries RM 20,000 20,000 40,000 20,000 25,000 25,000 Overhead RM 15,000 15,000 18,000 18,000 20,000 20,000 Additional information: (1) A franchise payment is made of RM6,000 per month. (2) 50% of the sales are for cash, 25% is received one month later and 25% two months later. (3) Purchases are paid one month later. (4) Wages are paid for in the month incurred. (5) Overheads do not include: a. Rent RM4,000 per month paid three monthly in advance, in December, March, June and September of the following year. b. Depreciation RM6,000 per month. c. All other overhead is paid one month later. (6) Capital expenditure payments will be: a. February RM8,500 b. March RM2,250 C. April RM5,000 (7) A cash balance of RM2,250 is forecast at 1 January You are required: (a) to prepare the Cash Budgets for January, February and March. (b) to comment briefly on the position of the Cash Budgets at the end of March

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