Problem:
Prepare a cash budget of M/s Novan Television & Co. on the basis of the following information for the first six months of 2010:
(a) Cost and prices unchanged.
(b) Cash sales - 25% and credit sales - 75%.
(c) 60% of credit sales are collected in the month after sales, 30% in the second month and 10% in the third. No bad debts are anticipated.
(d) Sales forecasts are as follows:
|
|
Rs
|
|
RS
|
|
October 2009
|
12,00,000
|
March 2010
|
8,00,000
|
|
November 2009
|
14,00,000
|
April 2010
|
12,00,000
|
|
December 2009
|
16,00,000
|
May 2010
|
10,00,000
|
|
January 2010
|
6,00,000
|
June 2010
|
8,00,000
|
|
February 2010
|
8,00,000
|
July 2010
|
12,00,000
|
(e) Gross profit margin 20%.
(f) Anticipated purchases:
|
|
Rs
|
|
January 2010
|
6,40,000
|
|
February 2010
|
6,40,000
|
|
March 2010
|
9,60,000
|
|
April 2010
|
8,00,000
|
|
May 2010
|
6,40,000
|
|
June 2010
|
9,60,000
|
(g) Wages and Salaries to be paid:
|
|
Rs
|
|
January 2010
|
1,20,000
|
|
February 2010
|
1,60,000
|
|
March 2010
|
2,00,000
|
|
April 2010
|
2,00,000
|
|
May 2010
|
1,60,000
|
|
June 2010
|
1,40,000
|
(h) Interest on Rs.10,00,000 @ 12% on debentures is due by the end of March and June.
(i) Excise deposit due in April Rs.2,00,000.
(j) Capital expenditure on plant and machinery planned for June Rs.1,20,000.
(k) Company has a cash balance of Rs.4,00,000 at 31.12.2009.
(l) Company can borrow on monthly basis.
(m) Rent is Rs.8,000 per month.