Illustration 3:
The following information is provided with respect to Rashmi Ltd. Prepare a
Cash budget for April, May, and June 2007.
Months Details Sales Purchases Wages Expenses
Jan Actual 80,000 45,000 20,000 5,000
Feb Actual 80,000 40,000 18,000 6,000
March Actual 75,000 42,000 22,000 6,000
April Budget 90,000 50,000 24,000 7,000
May Budget 85,000 45,000 20,000 6,000
June Budget 80,000 35,000 18,000 5,000
Additional information:
a. 10% of the purchases and 20% of sales are in cash.
b. The average collection period of the company is 1/2 month and the
credit purchases are paid regularly after one 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 1, 2007 may be assumed to be Rs. 15,000.
