Fm Cash Budget Sums.docx

Q1. From the following prepare Cash Budget for the period from 1st March to 31st August when the opening Cash Balance was Rs.40, 000. Month Sales Selling Purchases Wages Factor Administration Expenses Expenses Expenses January 3,40,000 14,000 1,60,000 30,000 20,000 10,000 February 3,20,000 15,000 1,68,000 32,000 22,000 11,000 March 5,64,000 13,000 1,66,000 3,36,000 16,000 9,000 April 3,10,000 13,600 1,66,000 24,000 21,000 9,400 May 3,30,000 14,800 1,52,000 36,000 24,000 10,800 June 4,00,000 14,000 1,36,000 32,000 19,200 11,400 July 3,60,000 12,000 34,000 34,000 16,000 10,000 August 4,40,000 11,000 1,16,000 33,000 19,200 10,000 (a) Period of credit allowed by suppliers and to customer 1 month. (b) Log in Payment of: i) Wages : 1 month ii) Factory Expenses : 1 month iii) Administration Expenses : 1 month iv) Selling Expenses : 1 month (c) Machinery Purchased for Rs.1, 00,000 in March payable on delivery in April. (d) Building purchased in April Rs.3, 00,000 payable in two equal installments in May and July. (e) Commission of 3% on sales payable two month after sales. Q2. Gamma Limited, a newly started company wishes to prepare cash budget from January. Prepare a cash budget for the first Six months from the following estimated figures:Month Sales Purchase Wages Overheads Jan 2,00,000 2,00,000 40,000 40,000 Feb 2,20,000 1,40,000 44,000 42,000 March 2,80,000 1,40,000 46,000 43,000 April 3,60,000 2,20,000 46,000 45,000 May 3,00,000 2,00,000 40,000 41,000 June 4,00,000 2,50,000 50,000 48,000 Cash balance on 1st January was Rs.1, 00,000. New machinery is to be installed at Rs.2, 00,000 on credit, to be repaid by two equal installments in March and April. Sales Commission @ 5% on total sales is to be paid within a month following the actual sales. Rs.1, 00,000 being the amount of 2nd Call may be received in March. Share Premium amounting to Rs.20, 000 is also obtainable with the 2nd Call. Period of credit allowed by suppliers Period of credit allowed to customers Delay in payment of overheads Delay in payment of wages Assume cash sales to be 50 % of total sales.

2 Months 1 Month 1 Month ½ Month

Q3. Prepare Cash Budget of Ambani Ltd. For the month of April, May and June, 2017 Month January February March April May June

Sale 1,60,000 1,60,000 1,50,000 1,80,000 1,70,000 1,60,000

Purchases 90,000 80,000 84,000 1,00,000 90,000 70,000

Wages 40,000 80,000 84,000 1,00,000 90,000 70,000

Expenses 10,000 12,000 12,000 14,000 12,000 10,000

You are informed that: (1) 50% of the purchases and sales are on cash. (2) The average collection period of the company is 1/2 month and credit purchases are paid off regularly after one month. (3) Time lag in payment of wages is one month. (4) Rent of Rs.1, 000 is payable every month. (5) Cash and Bank balance as on 31st March, 2002 was Rs. 3, 00,000. (6) Dividend received in May Rs.36, 000. (7) Professional fees to be paid in June Rs.1, 500. (8) Expenses are paid in the same month. Q4. Prepare a Cash Budget from July to December 2017 from the following of A Ltd. 1. Balance at bank on 1st July 2017 (estimated), is Rs. 10,000. 2. Sales are made to one distributor only on 30 day terms (or one month), 3% discount, and cheques are received on the first day of the month following due date. 3. Plant purchases totaling Rs. 5,000 are to be made in July. 4. Budgeted figures are: Items Purchases Wages Cash expenses Sales

July (Rs.) 5,000 4,000 400 6,000

Aug. (Rs.) 4,000 5,000 500 7,000

Sept. (Rs.) 3,000 4,000 400 8,000

Oct. (Rs.) 4,000 4,000 400 8,000

Nov. (Rs.) 4,000 5,000 500 9,000

5. All purchases are made on net 30 days terms and cheques are posted to creditors on the last day of the due month. 6. The company will be able to get an over draft facility from its bankers. Q5. From the following information and the assumption that the balance in hand on 1st Jan, 2017 is Rs.1, 45,000, prepare a cash budget: Month

Jan Feb Mar April

Sale

Materials

Rs.144000 Rs.50, 000 1, 94,000 62,000 1, 72,000 51,000 1, 77,000 61,200

Wages

Selling & Production Administration Distribution Cost Cost

Rs.20, 000 Rs.8, 000 24,200 10,000 21,000 11,000 50,000 13,400

Rs. 12, 000 12,600 12,000 13,000

Rs.3, 000 3,400 4,000 4,400

Dec. (Rs.) 5,000 4,000 400 12,000

May June

2, 05,000 2, 17,000

74,000 77,600

44,000 46,000

17,000 18,000

16,000 16,400

5,000 5,000

Assume that 50% are cash sales. Assets are to be required in the month of February and April. Therefore, provision should be made for payment of 16,000 and 50,000 for the same .An application has been made to a bank for grant of loan Rs.60, 000 and it is hoped that it will be received in the month of May .It is anticipated that a dividend of Rs.70, 000 will be paid in June. Debtors are allowed one month credit .Sales Commission @3% on sale is to be paid .Creditors (for goods or overhead) grant one months credit. Q6. Based on the following Information prepares a cash budget for ABC Ltd: 1st Qtr 2nd Qtr 3rd Qtr (Rs.) (Rs.) (Rs.) Opening cash balance 10,000 Collection from customer Payment Purchase of materials Other expenses Salary and wages Income tax Purchase of machinery

4th Qtr (Rs.) -

1,25,000

1,50,000

1,60,000

2,21,000

20,000 25,000 90,000 5,000 -

35,000 20,000 95,000 -

35,000 20,000 95,000 -

54,200 17,000 1, 09,200 20,000

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 multiple of Rs.500 at an interest of 10% per annum. Management does not want to borrowed cash more than what is necessary and wants to Repay as early as possible. In any event, loans cannot be extended beyond four quarter. Interest is computed and paid when the principle is repaid. Assume that borrowing take place Q7. Prepare a Cash Budget from the following information Month

Sales (Rs.)

Purchase Wages (Rs.) (Rs.)

December 2016 January 2017 February 2017 March 2017

2,90,000 4,85,000 4,10,000 4,90,000

1,90,000 1,35,000 1,30,000 1,20,000

55,000 70,000 55,000 1,05,000

Expenses Other (Rs.) Expenses (Rs.) 45,000 35,000 40,000 30,000 35,000 15,000 25,000 20,000

1. Cash in hand on 1.1.2017 was Rs. 55,170 and any shortfall is to be met with through temporary loans. 2. 30% Sales are for cash and debtors get realized in 2 months period equally. 3. One month credit is available from Creditors for Purchases. 4. Other Expenses are incurred on 1st of next month. Expenses include depreciation of Rs 5,000 per month at the beginning and payments are made at the end of the quarter