From the following particulars given, prepare a Cash Budget for 4 months from July to October 2005:
- Bank Balance on 1 July is expected to be Rs. 50,000.
- Expected capital expenditure: (a) Plant and Machinery to be purchased in September at a cost of Rs. 50,000 payable in October; (b) Extension of office building costing Rs. 40,000 is to be paid in four equal instalments starting from August and (c) Hire-Purchase instalment payment of Rs. 5,000 is to be made in each month.
- Cash Sales of Rs. 5,000 per month are expected.
- Forecast of monthly recurring incomes and expenditure:
|
Months |
Credit Sales |
Credit Purchases |
Wages |
Work expenses Rs. |
Office expenses Rs. |
Marketing expenses Rs. |
|
May |
25,000 |
15,000 |
1,900 |
1,200 |
3,500 |
1,000 |
|
June |
20,000 |
12,000 |
1,800 |
1,500 |
3,800 |
800 |
|
July |
24,000 |
14,000 |
1,780 |
1,400 |
3,400 |
1,100 |
|
August |
26,000 |
16,000 |
1,800 |
1,600 |
3,900 |
1,500 |
|
September |
28,000 |
15,000 |
1,790 |
1.800 |
4,000 |
1,800 |
|
October |
27,000 |
18,000 |
1,800 |
1.700 |
3,600 |
1,700 |
- Other information available: (a) A Sales commission of 4% on Credit Sales is to be paid to the salesman in the month in which the dues are collected; (b) The period of credit allowed to customers is 2 months and that
allowed for suppliers is 1 month; (c) Wages are paid fortnightly on the 1st & 16th of each month and (d) Other Expenses are paid in the month in which they become due.