Prepare a monthly Cash Budget in tabular form for the months of February, March and April; showing the bank balance at each month’s end.
The following data is available from the various functional budgets prepared at Congo Limited.
January February March April
$’000 $’000 $’000 $’000
CASH SALES 128 84 72 90
Credit Sales 1,140 760 640 800
Purchases for Resale 880 560 520 320
Salaries and Wages 266 280 238 248
Overhead Expense 160 150 160 140
Other information is available as follows:
1. 5% of all sales on credit are expected to become bad debts. Receipts from credit customers are due in the month following sale.
2. All goods are bought on credit from suppliers who allow 2 % cash discount for payment in the month following purchase.
3. Salaries and wages are paid in the month in which they are earned.
4. Payments for overhead expenses are made in the month following the month in which expenses are incurred. The above overhead budget includes $28,000 per month for depreciation.
5. Two new vans costing $21,000 each are to be paid for in April.
6. Taxation amounting to $175,000 is to be paid in March.
7. The balance at the bank as at 31st January is expected to be $222,000.