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abc ltd a newly started company wishes to prepare cash budget from january prepare a 674710

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.

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