ABC Ltd. a newly started company wishes to prepare cash budget from January. Prepare a cash budget for the first six months from the following estimated revenue and expenses.
Month |
Total Sales Rs. |
Materials Rs. |
Wages Rs. |
Overheads |
|
Production Rs. |
Selling & Distribution Rs. |
||||
Jan. |
20,000 |
20,000 |
4,000 |
3,200 |
800 |
Feb. |
22,000 |
14,000 |
4,400 |
3,300 |
900 |
March |
28,000 |
14,000 |
4,600 |
3,400 |
900 |
April |
36,000 |
22,000 |
4,600 |
3,500 |
1,000 |
May |
30,000 |
20,000 |
4,000 |
3,200 |
900 |
June |
40,000 |
25,000 |
5,000 |
3,600 |
1,200 |
Cash balance on Ist January was Rs.10,000. New machinery is to be installed at Rs.20,000 on credit, to be repaid by two equal installments in March and April.
Sales commission at @ 5% on total sales is to be paid within a month following actual sales.
Rs.10,000 being the amount of 2nd call may be received in March. Share premium amounting to
Rs.2,000 is also obtainable with the 2nd call.
Period of credit allowed by suppliers |
2 months |
|
Period of credit allowed to customers |
1 month |
|
Delay in payment of overheads |
1 month |
|
Delay in payment of wages |
1/2 month |
Assume cash sales to be 50% of total sales.