Question: Juliet Miles has savings of £10,000 and she has decided to open a retailing business. The predicted sales and purchases for the first six months are:
She predicts that 10% of the sales will be for cash and the remaining 90% will be paid in the month following the month of sales. Purchases must be paid for in the month in which they occur. Rent of the shop will be £12,000 per annum payable quarte rly in advance. Wages will be £500 payable each month. The electricity charge will be £1,000 payable at the end of each quarter. Telephone and postage charges will be £2,000 payable at the end of each quarter. Construct a cash budget.