1. Prepare a Cash Budget of Amruta Ltd.

, from the following

information for the six months commencing from April, 2019.
Total Sales Cash Purchases Salaries Paid
Month
₹ ₹ ₹

January 2,00,000 1,50,000 50,000

February 4,00,000 2,50,000 50,000
March 6,00,000 3,00,000 50,000
April 8,00,000 3,50,000 75,000
May 10,00,000 5,50,000 75,000
June 10,00,000 6,50,000 1,00,000
July 12,00,000 7,00,000 1,00,000
August 12,00,000 9,00,000 1,25,000
September 10,00,000 8,00,000 1,50,000

Information:

(1) Total sales comprises of 10% cash sales and 90% credit sales.
(2) 50% of credit sales are collected in the month following the sales,
balance 25% in the second month and remaining 25% in the third month.
(3) Opening cash balance of ₹ 1,75,000 as at 1st April, 2019.

(4) Rent is ₹ 15,000 per month, paid on 7th of next month.

(5) Interest on debentures of ₹ 25,000 is to be paid in June, every year.

(6) Payment for machinery in September 2019 ₹ 1,50,000.

(7) Excise deposit to be paid in August, 2019 ₹ 50,000.

2. You are give the following information by Rakesh, who started a new business with capital of
₹50,000.
a) Anticipated purchases and sales, during June, 2019 to December 2019.
Month Purchases Sales
Units @₹ Units @₹
June 6,000 10 4,000 12
July 6,000 10 4,000 12
August 8,000 9 7,000 12
September 8,000 9 7,000 12
October 10,000 8 9,000 12
November 10,000 8 9,000 12
December 10,000 8 9,000 12

b) Terms of payment for Purchases :

– 20% to be paid in advance before delivery
– 50% to be paid on credit of one month.
– 30% to be paid on credit of two months
c) Terms on which sales are expected to be realised :
– 30% are expected to be cash sales.
– 50% are expected to be on credit of one month.
– 20% are expected to be on credit of two months.
d) FIFO method is followed for inventory valuation.
e) Expenses other than purchases amounted to 40% of gross profit
of each month. They are paid in cash in the month itself.
f) Rakesh's drawings are ₹ 5,000 per month.
Prepare month wise cash budget for the period June, 2019 to December 2019.
3. Prepare Cash Budget of Anil Ltd. from the following information for six months
commencing from April, 2018.
Month Total Sales Cash Purchases Expenses
Jan 2018 3,00,000 40,000 50,000
Feb 2018 4,50,000 50,000 60,000
Mar 2018 6,50,000 65,000 75,000
April 2018 9,00,000 80,000 90,000
May 2018 12,00,000 1,10,000 1,20,000
June 2018 15,50,000 1,40,000 1,50,000
July 2018 19,50,000 1,75,000 1,85,000
Aug 2018 24,00,000 2,00,000 2,10,000
Sept 2018 29,00,000 2,50,000 2,60,000
Additional Information:
a. Total Sales comprises of 20% of cash sales and 80% credit sales.
b. Credit Purchases are 75% of total purchases through out.
c. 40% of credit sales are collected in the month following the sales,
balance 35% in the second month and remaining 25% in the
third month.
d. 50% of credit purchases are paid the month following the
purchases, balance 30% in the second month and remaining
20% in the third month.
e. Wages for Jan 2018 are ₹ 30,000, which increases every month
by 20% of the previous month and are paid with a time lag of
half month.
f. Opening Cash balance of ₹ 1,80,000 as at 1st April 2018.
g. Expenses of each month are paid with a time lag of one month.
h. Machinery purchased of ₹ 1,00,000 in May, 2018 on two months
credit.
i. Income tax paid in the month of June 2018 ₹ 75,000.
4. Hyundai Ltd. has given the" forecast sales for January 2019 to July 2019
and actual sales for November and December 2018. With the other
particulars given, prepare a Cash Budget for the months i.e. from January
to May 2019.
i) Sales :-
₹
November 2018 1,60,000
December 2018 1,40,000
January 2019 1,60,000
February 2019 2,00,000
March 2019 1,60,000
April 2019 2,00,000
May 2019 1,80,000
June 2019 2,40,000
July 2019 2,00,000
ii) Sales 20% cash and 80% credit, credit period two months.
iii) Variable expenses 5% on turnover, time lag of half month.
iv) Commission 5% on credit sale payable in two months.
v) Purchases are 60% of the sales. Payment will be made in 3 rd
month of purchases.
vi) Rent ₹ 6,000 paid every month.
vii) Other payments: Fixed assets purchases - February ₹ 36,000 and March
₹ 1,00,000 ; Taxes - April ₹ 40,000.
viii) Opening cash balance ₹ 50,000.

5. Prepare cash budget for Anu Ltd., on the basis of the following information for the first
six months of 2019 :
1. Total sales comprises of 25% as cash sales and 75% as credit
sales.
2. 60% of credit sales are collected in the month after sales, 30% in
the second month and 10% in the third, no bad debts are
anticipated.

3. Sales are estimated as follows :

October 2018 ₹ 12 lakh January 2019 ₹ 6 lakh April 2019 ₹ 12 lakh
November 2018 ₹ 14 lakh February ₹ 8 lakh May 2019 ₹ 10 lakh
2019
December 2018 ₹ 16 lakh March 2019 ₹ 8 lakh June 2019 ₹ 8 lakh
July 2019 ₹ 12 lakh
4. Gross Profit margin 20%.
5. Anticipated purchases –
January 2019 ₹ 6,40,000 April 2019 ₹ 8,00,000
February ₹ 6,40,000 May 2019 ₹ 6,40,000
2019
March 2019 ₹ 9,60,000 June 2019 ₹ 9,60,000
6. Wages and Salaries to be paid -
January 2019 ₹ 1,20,000 April 2019 ₹ 2,00,000
February ₹ 1,60,000 May 2019 ₹ 1,60,000
2019
March 2019 ₹ 2,00,000 June 2019 ₹ 1,40,000

7. Interest on 20,00,000 at 6% p.a. on debentures is due by the end of March

and June, 2019.
8. Excise deposit due in April ₹ 2,00,000.
9. Capital expenditure on Plant and Machinery planned for June ₹ 1,20,000.
10. The Company has a cash balance of ₹ 4,00,000 on 31st December, 2018.
11. The Company can borrow on monthly basis.
12. Rent is ₹ 8,000 p.m.
6. The sales forecast for January to May 2019 and actual sales for November
and December 2018 for PEPSI Cup Ltd. are given as under :
Month Sales (₹ )
Actual
Nov. 2018 80,000
Dec. 2018 70,000
Forecast
Jan. 2019 80,000
Feb. 2019 1,00,000
Mar. 2019 80,000
April 2019 1,00,000
May 2019 90,000

The following other information are also available :

i) 20% of sales is in cash and rest is on credit, payment of which is realized

in the third month.
ii) Amount of purchase is budgeted at 60% of the sales turnover of
a month and paid in the third month of purchase.
iii)Variable expenses is 5% of sales, time lag of payment one
month.
iv) Commission on credit sales @ 5% is payable in the third month
v) Payment of purchase of fixed assets ₹ 50,000 in March 2019.
vi) There will be an opening cash balance of ₹ 25,000.
You are required to prepare a cash budget for five month from January to May 2019.
7. The 'Alpha formal' company making for a stock in the first quarter of the year is assisted by its
Bankers with overdraft accommodation. The following are the relevant Budgeted figures :
Months Sales (₹ ) Purchases (₹ ) Wages (₹ )
November 1,20,000 83,000 9,800
December 1,28,000 96,000 10,000
January 72,000 1,62,000 8,000
February 1,16,000 1,64,000 4,000
March 84,000 1,79,000 10,400

Budgeted cash at Bank, 1st January, 2019 was ₹ 17,200. Credit

terms of sales on
payment by the end of the month following the month of supply.
On an average, one-half of sales are paid on due date while
the other half is paid during the next month. Creditors are
paid during the month following the month of supply.
You are required to prepare a cash budget for the quarter, 1st January to
31st March, 2019 showing the budgeted amount of bank facilities required at
each month.

8. From the information and the assumption that the cash balance
in hand on 1st January, 2019 is ₹ 72,500. Prepare a cash budget
from Jan, 2019 to June 2019. Assume that 50% of total sales are
cash sales.
Assets are to be acquired in the months of February and April.
Therefore, provisions should be made for the payment of ₹ 8,000
and ₹ 25,000 for the same. An application has been made to the
bank for the grant of a loan of ₹ 30,000 and it is hoped that the loan
amount will be received in the month of May.
It is anticipated that dividend of ₹ 35,000 will be paid in June.
Debtors are allowed one month's credit. Creditors for materials
purchased, Production overheads & office overheads are paid
after one month. Sales commission at 3% on total sales is paid to
the salesman in the same month. Salaries and wages are paid in the
same month.
Months Total Sales Material Salaries & Production Office
(₹ ) Purchases (₹ ) Wages (₹ ) Overheads (₹ ) Overheads (₹ )
January 72,000 25,000 10,000 6,000 5,500
February 97,000 31,000 12,100 6,300 6,700
March 86,000 25,500 10,600 6,000 7,500
April 88,600 30,600 25,000 6,500 8,900
May 1,02,500 37,000 22,000 8,000 11,000
June 1,08,700 38,800 23,000 8,200 11,500
9. PRABHU MILAN PRODUCTS Ltd. who commenced business in March – 2019 submits
to you the following estimates :-

Estimated Production No. of Sales Price Per

Month
Units Unit (₹ )
March – 2019 50,000*20% = 70
10000STOCK*(70*45%)
= 10000*31.50
40000UNITS SOLD * 70
PURCHASE =
50000@31.50

10000UNITS @ 31.50
April 52,000*20% = 72
10400STOCK @
(72*45%) = 10400*32.40
41600UNITS SOLD @
72 + 10000UNITS @ 72
PURCHASE =
52000*32.40

10400UNITS@32.40
May 48,000*20% = 72
9600STOCK@
(72*45%) = 9600*32.40
38400UNITS SOLD @
72 + 10400UNITS @ 72
PURCHASES =
48000*32.40

10400@32.40
June 40,000*20% = 74
8000STOCK @
(74*45%) = 8000*33.30
 32000UNITS SOLD @
74 + 10400 @ 74
PURCHASES =
40000*33.30

8000@33.30
July 36,000*20% = 7200 78
UNITS STOCK @
(78*45%) = 7200UNITS
@ 35.10
28800 UNITS SOLD @
78 + 8000 UNITS @ 78
PURCHASES =
36000*35.10

7200 @ 35.10
August 46,000*20% = 76
9200UNITS STOCK @
(76*45%) = 9200UNITS
@ 34.20
36800 UNITS SOLD @
76 + 7200UNITS @ 76
PURCHASES =
46000*34.20

9200@ 34.20
September – 2019 52,000*20% = 76
10400UNITS STOCK @
(76*45%) =
10400UNITS @ 34.20
41600UNITS SOLD @
76 + 9200 UNITS SOLD
@ 76
PURCHASES =
52000*34.20
You are provided the following information :-
1. 20% of the current months of production is held as closing stock.
2. Raw Material pricing is 45% of the sales price for the month.
3. There is no wastage or spoilage of raw materials. Raw materials
are not held in stock. Raw Material purchases equal the number
of units produced in that month.
4. 10% of raw materials are purchased on cash basis, 50% of the
suppliers are paid in next month and the balance 40% suppliers
are paid in the month after next.
5. 20% of the Sales are on Cash basis. The company provides one
month's credit to 40% of its customers. The balance 40% of the
customers pay up in the second month after sale.
6. Wages account for 25% of the sales price and workers are paid
on the seventh day of the next month for the previous month's
production.
7. Variable overheads account for 10% of the sales price and are
paid in the month of production.
8. Fixed overheads are 75,000 per month and are paid in the next
month.
9. It is anticipated that there would be a debenture issue of
₹ 5,00,000 in the month of June 2019 and debenture issue
expenses to the tune of 20% thereof would be incurred in May
2019.
10. The cash balance on 01-04-2019 is ₹ 80,000.
11. The Company would acquire trade investments of ₹ 5,00,000 in
May 2019, and ₹ 6,50,000 in July 2019. Ignore interest on trade
investments.
12. If there is any deficit during any month there is a standing Cash
Credit Facility, which will be utilized in multiples of ₹ 1,000, so
as to maintain minimum cash balance of ₹ 80,000.
13. Any surplus over ₹ 80,000 during a particular month is first
utilized to wipe off the Cash Credit in multiples of ₹ 1,000/- and
then the balance is converted into temporary Bank Fixed
 Deposit in multiples of ₹ 1,000/- (Ignore interest on Cash Credit
and Bank FD).
As Finance manager of Prabhu Milan Products Ltd. you are required to prepare monthly based
estimated Cash Budget for the six months period from April – 2019 up to September – 2019.

10. The cost structure of Paramount Products Ltd. which was incorporated on 01.04.2019 is
as follows :
Cost per
Unit (₹ )
Raw Material 75
Wages 108
Factory and Administration 57
Overheads
Total Cost 240
Add: Profit 60
Selling Price 300
Sales are as follows –
During April to August - 400 units per month.
During September to December - 750 units per month.
During January to March - 400 units per month.
Sales are as follows :
a) Sale to Dealers with credit of one month – 40% of sales.
b)Sale to Wholesalers with credit to two months – 40% of sales.
The balance sales are on cash basis.
a) Cash Purchases - 30% of Purchases
b) Purchases on one months credit - 70% Purchases
Purchases of raw material are effected in the same month as
required for sale.
Wages for a month are paid on the first day of next month.
Factory and Administration overheads of each month are
 paid, half during the same month and half during next
month. Company purchased a machine for ₹ 1,30,000 on
25.11.2018 on down payment of ₹ 30,000 and balance was
payable after two months. Company has 10% Preference
Share Capital of ₹ 10,00,000 on which dividend is paid in
march every year.
Cash on hand on 01.12.2018 was ₹ 50,000 Prepare Cash
Budget for the period December, 2018 to March, 2019 for
the above information.

11. Avadesh Export corporation is a trading concern with three partners. The sales estimated are
as under:
August to ₹ 1,00,000 per month
October
March to May ₹ 1,20,000 per month
November to ₹ 80,000 per month
February
June and July ₹ 60,000 per month
The cost of purchases is 60% of sales. The stock level
remains unchanged.
Other Expenses are as under :

a) Office Expenses ₹ 5,000 per month.

b) Selling Expenses 5% of sales
The partners withdraw for personal use @ ₹ 5,000 per partner per month. The terms of credit
are as under :

a) Sales – 20% Cash

 – 40% against Bills of Exchange payable 30 days
later. Bills are discounted with S.B.I,
immediately, discounting charges being 2%.
– 40% on one month's credit.
b) Purchases – 30% on cash basis
– Balance on one month's credit
c) Selling expenses are paid two months after sales.
The other transactions are as under.

a) Income Tax payable ₹ 60,000 in three equal installments

due in Sep., Dec. and March.
b) A portion of premises is sub-let at rent of ₹ 5,000 per
month receivable at the end of the relevant month for May
to August.
c) In April one Delivery Van is purchased at a cost of ₹
1,20,000. This is financed to the extent of 75% by Bank
loan and the balance is payable immediately. Loan is
repayable in three years with quarterly installment of ₹
7,500 commencing from July. Interest on loan @ 12% p.a.
is payable separately on reduced balance.
d) Opening Cash Balance on 1st April Nil.
You are required to prepare Cash Budget from April to December
2018.