Cash Budget

Cash Budget
1. From the following forecast of income and expenditure,
prepare a cash budget for the months January to April,
2008:Particulars

Nov

Dec

Jan

Feb

Mar

April

Sales

30,000

35,000

25,000

30,000

35,000

40,000

Purchases

15,000

20,000

15,000

20,000

22,500

25,000

Wages

3,000

3,200

2,500

3,000

2,400

2,600

Man. Exp.

1,150

1,225

990

1,050

1,100

1,200

Adm. Exp.

1,060

1,040

1,100

1,150

1,220

1,180

500

550

600

620

570

710

Selling Exp.

(a) Plant costing Rs. 16,000 is due for delivery in July

payable 10% on delivery and the balance after 3
months.
(b) Advance tax of Rs. 8,000 is payable in March and
June each.
(c) Creditors allow 2 months credit and debtors are
paying one month late.
(d) Opening Balance of Cash is Rs. 8,000
(e) Lag in payment of expenses is one month.
Prepare a Cash Budget for the months May to July.(W-08)
4. Prepare a Cash Budget of Raju and Company for April,
May and June 2008:Month
Sales
Purchases
Wages
Expenses
Jan.
80,000
45,000
20,000
5,000
Feb.
80,000
40,000
18,000
6,000
March
75,000
42,000
22,000
6,000
April
90,000
50,000
24,000
7,000
May
85,000
45,000
20,000
6,000
June
80,000
35,000
18,000
5,000
Additional information:(a) 10% of the purchase and 20% of sales are for cash.
(b) The average collection period of the company is
month and credit purchase are paid regularly after 1
month
(c) Wages are paid half monthly and the rent of Rs. 500
included in expenses is paid monthly. Other expenses
are paid after one month lag.
(d) Cash Balance on April 1st 2008 may be assumed to be
Rs. 15,000.

Additional information is as follows:

1. The customers are allowed a credit period of 2
months.
2. A dividend of Rs. 10,000 is payable in April.
3. Capital expenditure to be incurred : Plant purchased
on 15th January for Rs. 5,000; a Building has been
purchased on 1st March and the payments are to be
made in monthly installments of Rs. 2,000 each.
4. The creditors are allowing a credit of 2 months.
5. Wages are paid on the 1st of the next month.
6. Lag in payment of other expenses is one month.
7. Balance of cash in hand on 1 st January, 2008 is Rs.
15,000
2. From the following budget data, forecast the cash
position at the end of April, May and June 2008:Month
Sales
Purchases
Wages
Misc.
February
1,20,000
84,000
10,000
7,000
March
1,30,000
1,00,000
12,000
8,000
April
80,000
1,04,000
8,000
6,000
May
1,16,000
1,06,000
10,000
12,000
June
88,000
80,000
8,000
6,000
Additional information
Sales: 20% realized in the month of sales, discount allowed
2%. Balance realized equally in two subsequent months.
Purchases: These are paid in the month following the
month of supply.
Wages: 25% paid in arrears following month.
Miscellaneous expenses: Paid a month in arrear
Rent: Rs. 1,000 per month paid quarterly in advance due
in April.
Income-tax: First installment of advance tax Rs. 25,000
due on or before 15th June.
Income from investment: Rs. 5,000 received quarterly, in
April, July, etc.
Cash in hand: Rs. 5,000 on 1st April, 2008.
3. The income and expenditure forecast for months of
March to August, 2008 are given as follows:
Particulars

March

Apr

May

June

July

Aug

Sales

60,000

62,000

64,000

58,000

56,000

60,000

Purchases

36,000

38,000

33,000

35,000

39,000

34,000

Wages

9,000

8,000

10,000

8,500

9,500

8,000

Man. Exp.

3,500

3,750

4,000

3,750

5,000

5,200

Office Exp.

2,000

1,500

2,500

2,000

1,000

1,500

Selling Exp.

4,000

5,000

4,500

3,500

3,500

4,500

5.
ABC Company Ltd. has given the following
particulars. You are required to prepare a Cash Budget
for the three months ending 31st March, 2008:
Months
Sales
Materials
Wages
Overheads
Nov. 07
40,000
20,400
7,600
3,800
Dec. 07
42,000
20,000
7,600
4,200
Jan. 08
46,000
19,600
8,000
4,600
Feb. 08
50,000
20,000
8,400
4,800
March 08
60,000
21,600
9,000
5,000
(i)
Credit terms are:Sales/debtors 10% sales are on cash basis; remaining
credit sales are collected in the next month.
(ii)
Creditors:Material 2 months
Wages month
Overhead 1 month
(iii)
Cash balance on 1st January is expected to be Rs.
18,000
(iv)
The monthly installment of a machine Rs. 5,000 is
payable from January onwards
(v)
Dividend Rs. 30,000 is payable on preference
shares in March.
(vi)
Advance income tax to be paid in March Rs.
10,000.

You are given the following further information:

1
By Anup K Suchak

Cash Budget

6. From the following forecast of income and expenditure

prepare a cash budget for the months commencing 1 st
June, when the bank balance was Rs. 1,00,000:
Particulars April
May
June
July
Aug.
Sales
80,000 76,500 78,500 90,000 95,000
Purchases
41,000 40,500 38,500 37,000 35,000
Wages
5,600
5,400
5,400
4,800
4,700
Fact. Exp.
3,900
4,200
5,100
4,800
4,700
Adm. Exp. 10,000 14,000 15,000 17,000 13,000
A sales commission of 5% on sales, due two months after
sales is payable in addition to selling expenses. Plant
valued at Rs. 65,000 will be purchased and paid for in
August, and the dividend for the last financial year of Rs.
15,000 will be paid in July. There is two months credit
period allowed to customers and received from suppliers.
All the expenses are payable in the above month.
7. Alankar Company is expecting to have Rs. 40,000 cash
in hand on 1st April 2008 and it requires you to prepare
cash budget for the three months, April to June 2008. The
following information is supplied to you:
Months
Sales
Purchases Wages
Expenses
February
70,000
40,000
8,000
6,000
March
80,000
50,000
10,000
7,000
April
92,000
52,000
12,000
8,000
May
1,00,000
60,000
14,000
9,000
June
1,20,000
55,000
15,000
10,000
Other information:(i)
Period of credit allowed by suppliers is two
months
(ii)
25% of sale is for cash and the period of credit
allowed to customers for credit sale is one month.
(iii)
Delay in payment of wages and expenses one
month.
(iv)
Income tax Rs. 30,000 is to be paid in June 2008.

2
By Anup K Suchak