Question:
Prepare a Cash Budget for 6 months that ended on 30 June 2010, on the basis of the following information:
1. The estimated Sales and Expenses are as follows:
|
Nov."09 Rs.
|
Dec.09
Ps.
|
jan"10
Rs.
|
Feb.10
Rs.
|
March10
Rs.
|
Apri10
Rs.
|
May10
Rs.
|
june"I0
Rs.
|
|
Sales
|
2,00,000
|
2,20,000
|
120,000
|
1.00,000
|
1,50,000
|
2.40.000
|
2,00,000
|
2,00,000
|
|
Wages & salaries
|
30,000
|
30.000
|
24,000
|
24,000
|
24,000
|
30,000
|
27,000
|
27.000
|
|
Misc. expenses
|
27,000
|
27.000
|
21,000
|
30,000
|
24,000
|
27,000
|
27,000
|
27,000
|
1. 20% of the sales are in cash and the balance on credit.
2. The firm has a gross margin of 25% on sales.
3. 50% of the Credit Sales are collected in the month following the sales, 30% in the second month and the balance 20% in the third month.
4. Material for the sale of each month is purchased 1 month in advance on a credit for 2 months.
5. The time lag in the payment of wages and salaries is 1/3 of a month and of Miscellaneous Expenses is
1 month.
6. Debentures worth Rs. 40,000 are sold in January 2010.
7. The firm maintains a minimum Cash Balance of Rs. 40,000. Funds can be borrowed @ 12% p.a. in the multiples of Rs. 1,000, the interest being payable on a monthly basis.
8. Cash Balance at the end of December 2009 is Rs. 60,000.