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 2 Months

Period of credit allowed to customers 1 Month
Delay in payment of overheads 1 Month
Delay in payment of wages ½ Month

Assume cash sales to be 50 % of total sales.

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

Month Sale Purchases Wages Expenses

January 1,60,000 90,000 40,000 10,000
February 1,60,000 80,000 80,000 12,000
March 1,50,000 84,000 84,000 12,000
April 1,80,000 1,00,000 1,00,000 14,000
May 1,70,000 90,000 90,000 12,000
June 1,60,000 70,000 70,000 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 July Aug. Sept. Oct. Nov. Dec.

(Rs.) (Rs.) (Rs.) (Rs.) (Rs.) (Rs.)
Purchases 5,000 4,000 3,000 4,000 4,000 5,000
Wages 4,000 5,000 4,000 4,000 5,000 4,000
Cash expenses 400 500 400 400 500 400
Sales 6,000 7,000 8,000 8,000 9,000 12,000

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 Sale Materials Wages Selling & Production Administration

Distribution Cost Cost

Jan Rs.144000 Rs.50, 000 Rs.20, 000 Rs.8, 000 Rs. 12, 000 Rs.3, 000
Feb 1, 94,000 62,000 24,200 10,000 12,600 3,400
Mar 1, 72,000 51,000 21,000 11,000 12,000 4,000
April 1, 77,000 61,200 50,000 13,400 13,000 4,400
May 2, 05,000 74,000 44,000 17,000 16,000 5,000
June 2, 17,000 77,600 46,000 18,000 16,400 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 4th Qtr
(Rs.) (Rs.) (Rs.) (Rs.)
Opening cash balance 10,000 - - -

Collection from customer 1,25,000 1,50,000 1,60,000 2,21,000

Payment
Purchase of materials 20,000 35,000 35,000 54,200
Other expenses 25,000 20,000 20,000 17,000
Salary and wages 90,000 95,000 95,000 1, 09,200
Income tax 5,000 - - -
Purchase of machinery - - - 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 Purchase Wages Expenses Other

(Rs.) (Rs.) (Rs.) (Rs.) Expenses
(Rs.)
December 2016 2,90,000 1,90,000 55,000 45,000 35,000
January 2017 4,85,000 1,35,000 70,000 40,000 30,000
February 2017 4,10,000 1,30,000 55,000 35,000 15,000
March 2017 4,90,000 1,20,000 1,05,000 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