Scribd Logo
Upload

Welcome to Scribd!

  • 54 views

    Cash Budgeting

    Uploaded by

    sunil.ct
    The company expects to have AED 25,000 cash on April 1st. The cash budget estimates cash position from April to June 2016 based on expected sales, purchases, wages and expenses. Receipts are expected to be AED 100,500 in April, AED 140,500 in May, and AED 177,500 in June. Payments are estimated to be AED 54,000 in April, AED 68,000 in May, and AED 103,000 in June. The closing cash balances are projected to be AED 46,500 in April, AED 72,500 in May, and AED 74,500 in June.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd

    Cash Budgeting

    Uploaded by

    sunil.ct
    54 views3 pages
    The company expects to have AED 25,000 cash on April 1st. The cash budget estimates cash position from April to June 2016 based on expected sales, purchases, wages and expenses. Receipts are expected to be AED 100,500 in April, AED 140,500 in May, and AED 177,500 in June. Payments are estimated to be AED 54,000 in April, AED 68,000 in May, and AED 103,000 in June. The closing cash balances are projected to be AED 46,500 in April, AED 72,500 in May, and AED 74,500 in June.

    Original Title

    CASH BUDGETING - Copy

    Copyright

    © © All Rights Reserved

    Available Formats

    DOCX, PDF, TXT or read online from Scribd

    Did you find this document useful?

    Is this content inappropriate?

    The company expects to have AED 25,000 cash on April 1st. The cash budget estimates cash position from April to June 2016 based on expected sales, purchases, wages and expenses. Receipts are expected to be AED 100,500 in April, AED 140,500 in May, and AED 177,500 in June. Payments are estimated to be AED 54,000 in April, AED 68,000 in May, and AED 103,000 in June. The closing cash balances are projected to be AED 46,500 in April, AED 72,500 in May, and AED 74,500 in June.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    54 views3 pages

    Cash Budgeting

    Uploaded by

    sunil.ct
    The company expects to have AED 25,000 cash on April 1st. The cash budget estimates cash position from April to June 2016 based on expected sales, purchases, wages and expenses. Receipts are expected to be AED 100,500 in April, AED 140,500 in May, and AED 177,500 in June. Payments are estimated to be AED 54,000 in April, AED 68,000 in May, and AED 103,000 in June. The closing cash balances are projected to be AED 46,500 in April, AED 72,500 in May, and AED 74,500 in June.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    of 3

    1.

    A company is expecting to have AED 25000 cash in hand on 1st April 2016 and it requires you to
    prepare an estimate of cash position during the three month, April to June 2016. The following
    information is supplied to you.

    Months Sales(AED) Purchase(AED) Wages(AED) Expenses(AED)


    March 70,000 40,000 8,000 6,000
    April 92,000 52,000 9,000 7,000
    May 100,000 60,000 10,000 8,000
    June 120,000 55,000 12,000 9,000
    Other information:
    1. Period of credit allowed by suppliers – one month
    2. 25% of sale is for cash and the period of credit allowed to customers for credit sale is one month.
    3. Delay in payment of wages and expenses – one month.
    4. Income tax of AED 25,000 is to be paid in June 2016.

    CASH BUDGET
    APRIL MAY JUNE
    Receipts: 25,000 46,500 72,500
    Cash Sales 23,000 25,000 30,000
    Collection from Debtors 52,500 69,000 75,000
    Total Receipts 100,500 140,500 177,500
    Payments:
    Payment to Creditors 40,000 52,000 60,000
    Payment of Wages 8,000 9,000 10,000
    Payment of Expenses 6,000 7,000 8,000
    Income Tax --- -- 25,000
    Total Payments 54,000 68,000 103,000
    Closing cash balance 46,500 72,500 74,500

    2. San Jos Co. wishes to approach the bankers for temporary overdraft facility for the period from October
    2016 to December 2016. During the period of these three months, the firm will be manufacturing mostly
    for stock. You are required to prepare a cash budget for the above period.
    Month Sales ($) Purchases ($) Wages ($)
    August 460,000 449,600 34,000
    September 484,000 288,000 25,000
    October 316,000 686,000 18,000
    November 548,000 392,000 20,000
    December 352,000 436,000 20,000
    (a) All sales are on credit. 50% of credit sales are realized in the month following the sales and
    remaining 50% in the second following.
    (b) Creditors are paid in the month following the month of purchase
    (c) Estimated cash as on 1‐10‐2016 is $35,000.

    3. From the following information, prepare cash budget of a business firm for the months of April and May.
    (a) The firm makes 20 per cent cash sales. Credit sales are collected 40, 30 and 25 per cent in the month
    of sales, month after and second month after sales, respectively. The remaining 5 per cent becomes bad
    debts.
    (b) The firm is entitled to 2 per cent discount on all its purchases if bills are paid within 15 days and the
    firm avails of all such discounts. Monthly purchases are made in two equal lots on fortnightly basis.
    (c) Expenses are paid at a ratio of 30:70 in the same month and the following respectively.
    (e) Other data is:

    Month Sales Purchases Expenses


    Jan 100,00 80,000 30,000
    0
    Feb 120,00 70,000 25,000
    0
    March 150,00 100,000 30,000
    0
    April (Budgeted) 170,00 120,000 20,000
    0
    May (Budgeted) 140,00 110,000 20,000
    0

    Solution:
    CASH BUDGET FOR THE MONTHS OF APRIL & MAY
    Receipts: April May
    Opening cash balance ---- 3,800
    Cash Sales 34,000 28,000
    Collection from debtors (April:54,400+36,000+24,000 and for 114,400 115,600
    May: 44,800+40,800+30,000)
    Total Receipts 148,400 147,400
    Payments:
    Payments to Creditors 117,600 107,800
    Expenses (April:6,000+21,000 = 27,000 and for May: 27,000 20,000
    6,000+14,000 = 20,000)
    Total Payments 144,600 127,800
    Closing Cash Balance 3,800 19,600

    You might also like