From the following information, prepare cash budget for the month of January to April:
|Expected Sales||Expected Purchase|
Wages to be paid to workers Rs. 5,000 each month. Balance at the bank on 1st Jan. $8,000. It has been decided by the Management that:
(i) In case of deficit fund within the limit of $10,000 arrangements can be made with bank.
(ii) In case of deficit fund exceeding Rs. 10,000 but within the limits of $42,000 issue of debentures is to be preferred.
(iii) In case of deficit fund exceeding $42,000, issue of shares is preferred (considering the fact that it is within the limit of authorized capital).
|Issue of debentures||–||30,000||41,000||–|
|Issue of shares||–||–||–||55,000|
Prepare Cash Budget of a Company for April, May and June 2019 in a columnar form using the following information:
You are further informed that:
(a) 10% of purchase and 20% of Sale are for cash
(b) The average collection period of the Co. is 1/2 month and credit purchase is paid off regularly after one month
(c) Wages are paid half monthly and the rent of $500 excluded in expense is paid monthly
(d) Cash and Bank Balance on April 1, was $15,000 and the company wants to keep it on end of every month below this figure, the excess cash being put in fixed deposits.
Cash Budget – 2019:
|April ($)||May ($)||June ($)|
|Cash & Bank Balance||15,000||11,700||12,700|
|Cash Sale (20%)||18,000||17,000||16,000|
|Cash collections From Drs.||66,000||70,000||66,000|
|Cash flow (10%)||5,000||4,500||3,500|
|Payment of Crs.||37,800||45,000||40,500|
|Cash balance (closing)||21,700||12,700||13,200|
From the following information prepare a monthly cash budget for the three months ending 31st Dec.2019.
|Admin. Selling, etc|
(i) Credit terms are:
(a) Sales — 3 months to debtors. 10% of sales are on cash. On an average, 50% of credit sales are paid on the due dates while the other 50% are paid in the month following
(b) Creditors for material — 2 months.
(ii) Lag in payment:
Wages. 1/4 month, overheads — 1/2 month.
(iii) Cash and Bank Balance on 1st Oct. expected $1,500.
(iv) Other information
(a) Plant and Machinery to be installed in Aug. at a cost of $24,000. It will be paid for by monthly installments of $5,00 each from 1st Oct.;
(b) Preference share dividend @ 5% on $50,000 are to be paid on 1st Dec.
(c) Calls on 250 equity shares @ $2 per share expected on 1st November;
(d) Dividends from investments amounting to $250 are expected on 31st Dec.;
(e) Income tax (advance) to be paid in December $ 500
Period: 3 months ending 31 Dec. 2019
|Details:||Ocr. ($)||Nov. ($)||Dec. ($)|
|Adm. S. & D.||187.50||200.00||212.50|
|Plant and Machinery 500 each||5,00.00||5,00.00||5,00.00|
|Total (B) Year||4,175.00||4,150.00||7,337.50|
|Balance c/d (A – B)||537.50||350||(-3,025)|
Calculation of amount of sales:
|Month||Sale ($)||Oct. ($)||Nov. ($)||December ($)|
1/4 wages of September and 3/4 wages of Oct. Thus,
(1/4 x 750) = 187.50
3/4 x 800 = 600
Total = 787.50
The wages of other months will be calculated on the same pattern.