Prepare a Cash Budget from the following information for ABC Ltd.
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Particulars |
1st Quarter [Rs.] |
IInd Quarter |
IIIrd Quarter |
IVth Quarter |
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[Rs.] |
[Rs.] |
[Rs.] |
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Opening Cash |
10, 000 |
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Collections from |
1,25, 000 |
1,50, 000 |
1,60, 000 |
2,21, 000 |
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customers |
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Payments: |
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Purchase of Materials |
20, 000 |
35, 000 |
35, 000 |
54, 200 |
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Other expenses |
25, 000 |
20, 000 |
20, 000 |
17, 000 |
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Salaries and wages |
90, 000 |
95, 000 |
95, 000 |
1,09, 200 |
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Particulars |
1st Quarter [Rs.] |
IInd Quarter |
IIIrd Quarter |
IVth Quarter |
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[Rs.] |
[Rs.] |
[Rs.] |
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Income tax |
5, 000 |
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Machinery Purchase |
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20, 000 |
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The company desires to maintain a cash balance of Rs.15, 000 at the end of each quarter. Cash can be borrowed or repaid in multiples of Rs.500 at an interest rate of 10% p.a. Management does not want to borrow cash more than what is necessary and wants to repay as early as possible. In any event, loans cannot be extended beyond a quarter. Interest is computed and paid when principal is repaid. Assume that borrowing takes place at the beginning and repayments are made at the end of the quarter.