Example 5: Prepare Cash Budget for July-December from the following information:- (1) The estimated sales, expenses etc. are as follows:- (in lakhs) November Particular December June July Aug Sept October Sales 34 40 40 50 50 60 65 Purchase 24 16 17 20 20 25 28 Wages and Salaries 12 14 14 18 18 20 22 Miscellaneous 5 6 6 6 7 7 7 Interest Received 2 2 2 Sales of Shares 20 - (2) 20% of the sales are on cash with 3% cash discount and the balance on credit. (3) 1% of the credit sales are returned by the customers. 2% of the net receivable constituted bad debt losses. 50% of the good accounts receivable are collected in the month following the sales with 1% cash discount, 30% of the goods accounts receivable are collected in the 2nd month following the sales and the rest in the 3 month following sales. (4) The time lag in the payment of misc. expenses and purchases is one month. Wages are salaries are paid fortnightly with a time lag of 15 days. (5) The company keeps minimum cash balance of 25.00 lakhs. Cash in excess of 27 lakhs is invested by borrowing from banks in multiple of 2 lakhs & also repaid by same amount. The rate of interest is 12% p.a. (Compounded Monthly). in Govt . Securities in the multiple of * 1 lakh. Shortfalls in the minimum cash balance are made good (6) The opening cash balance is 26 lakhs. (7) Sales in the month of April & May was 44 & 40 lakhs respectively. (8) You may assume that borrowing will be at the 1" day of the month of short falls and will be repaid on the last date of the month. Solution: Example 5: Prepare Cash Budget for July-December from the following information:- (1) The estimated sales, expenses etc. are as follows:- (in lakhs) November Particular December June July Aug Sept October Sales 34 40 40 50 50 60 65 Purchase 24 16 17 20 20 25 28 Wages and Salaries 12 14 14 18 18 20 22 Miscellaneous 5 6 6 6 7 7 7 Interest Received 2 2 2 Sales of Shares 20 - (2) 20% of the sales are on cash with 3% cash discount and the balance on credit. (3) 1% of the credit sales are returned by the customers. 2% of the net receivable constituted bad debt losses. 50% of the good accounts receivable are collected in the month following the sales with 1% cash discount, 30% of the goods accounts receivable are collected in the 2nd month following the sales and the rest in the 3 month following sales. (4) The time lag in the payment of misc. expenses and purchases is one month. Wages are salaries are paid fortnightly with a time lag of 15 days. (5) The company keeps minimum cash balance of 25.00 lakhs. Cash in excess of 27 lakhs is invested by borrowing from banks in multiple of 2 lakhs & also repaid by same amount. The rate of interest is 12% p.a. (Compounded Monthly). in Govt . Securities in the multiple of * 1 lakh. Shortfalls in the minimum cash balance are made good (6) The opening cash balance is 26 lakhs. (7) Sales in the month of April & May was 44 & 40 lakhs respectively. (8) You may assume that borrowing will be at the 1" day of the month of short falls and will be repaid on the last date of the month. Solution