Prepare a Cash Budget for the 3 months that ended on 30 June 2010 on the basis of the following information:
- Estimated Sales and Expenses are as follows:
|
January |
February |
March |
April |
May |
June |
|
|
Rs, |
Rs, |
Rs, |
Rs, |
Rs, |
Rs, |
|
|
Sales |
1,20,000 |
1,00,000 |
1,50,000 |
2,40,000 |
2,00,000 |
2,00,000 |
|
Wages & Salaries |
24,000 |
24,000 |
24,000 |
30,000 |
27,000 |
27,000 |
|
Miscellaneous Expenses |
21,000 |
30,000 |
30,000 |
27,000 |
34,000 |
17,000 |
- 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 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.
- Time lag in the payment of wages and salaries is one-third of a month and of Miscellaneous Expenses is 1 month.
- Debentures worth Rs. 40,000 are sold in April 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 monthly basis.
- Cash Balance at the end of March 2010 is Rs. 64,800.