Prepare a Cash Budget for 6 months that ended on 30 June 2010, on the basis of the following information:
- The estimated Sales and Expenses are as follows:
|
Nov.”09 Rs. |
Dec.09 |
jan”10 |
Feb.10 |
March10 |
Apri10 |
May10 |
june”I0 |
|
|
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 |
- 20% of the sales are in cash and the balance on credit.
- The firm has a gross margin of 25% on sales.
- 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.
- Material for the sale of each month is purchased 1 month in advance on a credit for 2 months.
- The time lag in the payment of wages and salaries is 1/3 of a month and of Miscellaneous Expenses is
1 month. - Debentures worth Rs. 40,000 are sold in January 2010.
- 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.
- Cash Balance at the end of December 2009 is Rs. 60,000.