A newly started company wishes to prepare Cash Budget from January 2008. Prepare a Cash Budget for…


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A newly started company wishes to prepare Cash Budget from January 2008. Prepare a Cash Budget for… 1 answer below » A newly started company wishes to prepare Cash Budget from January 2008. Prepare a Cash Budget for the first six months from the following estimated receipts and expenditures. View complete question » Month Total Sales Rs. Materials Rs. Wages Rs. Production Overheads Selling & Distribution Rs. Overheads Rs. January 20,000 20,000 4,000 3,200 800 February 22,000 14,000 4,400 3,300 900 March 24,00 A newly started company wishes to prepare Cash Budget from January 2008. Prepare a Cash Budget for the first six months from the following estimated receipts and expenditures. Month Total Sales Rs. Materials Rs. Wages Rs. Production Overheads Selling & Distribution Rs. Overheads Rs. January 20,000 20,000 4,000 3,200 800 February 22,000 14,000 4,400 3,300 900 March 24,000 14,000 4,600 3,300 800 April 26,000 12,000 4,600 3,400 900 May 28,000 12,000 4,800 3,500 900 June 30,000 16,000 4,800 3,600 1,000 Cash balance on 1st January was Rs.10, 000. A new machine is to be installed at Rs.30, 000 on credit to be repaid by two equal installments in March and April. Sales commission @ 5% on total sales is to be paid within the month following actual sales. Rs.10, 000 being the amount of 2nd call on shares may be received in March. Share premium amounting to Rs.2, 000 is also receivable with 2nd call. Credit allowed by suppliers is 2 months, credit allowed to customers is 1 month, delay in payment of overheads is 1 month, and delay in payment in wages is ½ month. Assume cash sales to be 50% of total sales. Cash Budget January – June 2008 Rs. Particulars Jan. Feb March April May June A]  Opening Balance 10,000 18,000 29,800 20,000 6,100 8,800 B]  Expected Receipts I]  Cash Sales [50% of total sales] 10,000 11,000 12,000 13,000 14,000 15,000 II]  Collections from Debtors [1 month credit] 10,000 11,000 12,000 13,000 14,000 III] Share 2nd Call 10,000 IV] Share Premium 2,000 C]  Total Expected 10,000 21,000 35,000 25,000 27,000 29,000 Receipts [I+II+III+IV] D] Total Cash Available [A + C] 20,000 39,000 64,800 45,000 33,100 37,800 E] Expected Payments I] Payment for Purchases [2 months credit] 20,000 14,000 14,000 12,000 II] Production overheads [1 month delay] 3,200 3,300 3,300 3,400 3,500 IV] S & D overheads 1 month delay] 800 900 800 900 900 V] Wages * 2,000 4,200 4,500 4,600 4,700 4,800 VI] Sales Commission 1,000 1,100 1,200 1,300 1,400 VII] Machine Purchase 15,000 15,000 F] Total Payments 2,000 9,200 44,800 38,900 24,300 22,600 G] Cl. Balance [D –F] 18,000 29,800 20,000 6,100 8,800 15,200 There is a delay in payment of wages by ½ month; hence 50% of current month and 50% of previous month is paid in the current month. The payment made in each month is show below. Particulars January February March April May June Wages 2,000 2,000 Jan 2,200 Feb 2,200 Feb 2,300 Mar 2,300 M 2,300 A 2,300 A 2,400 M 2,400 M 2,400 J 4,200 (Total) 4,500 (Total) 4,600 (Total) 4,700 (Total) 4,800 (Total) View less » Jul 24 2014 07:50 AM

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