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    Cash Management: Problems

    Uploaded by

    Poojitha Reddy
    1) The document provides information to prepare cash budgets for multiple companies over 3 month periods. It includes data on monthly sales, purchases, wages, expenses and additional notes on credit terms, tax payments, and cash on hand. 2) Five problems/questions are presented with varying amounts of financial data and notes to develop 3 month cash budgets showing the company's expected cash position at the end of each month. 3) The cash budgets would forecast cash inflows from sales and outflows for purchases, wages, expenses, taxes, and other payments to determine if and when outside financing like overdraft facilities might be needed.

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

    Cash Management: Problems

    Uploaded by

    Poojitha Reddy
    149 views4 pages
    1) The document provides information to prepare cash budgets for multiple companies over 3 month periods. It includes data on monthly sales, purchases, wages, expenses and additional notes on credit terms, tax payments, and cash on hand. 2) Five problems/questions are presented with varying amounts of financial data and notes to develop 3 month cash budgets showing the company's expected cash position at the end of each month. 3) The cash budgets would forecast cash inflows from sales and outflows for purchases, wages, expenses, taxes, and other payments to determine if and when outside financing like overdraft facilities might be needed.

    Original Description:

    Total notes and numericals about cash management

    Original Title

    Cash Management

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    1) The document provides information to prepare cash budgets for multiple companies over 3 month periods. It includes data on monthly sales, purchases, wages, expenses and additional notes on credit terms, tax payments, and cash on hand. 2) Five problems/questions are presented with varying amounts of financial data and notes to develop 3 month cash budgets showing the company's expected cash position at the end of each month. 3) The cash budgets would forecast cash inflows from sales and outflows for purchases, wages, expenses, taxes, and other payments to determine if and when outside financing like overdraft facilities might be needed.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    149 views4 pages

    Cash Management: Problems

    Uploaded by

    Poojitha Reddy
    1) The document provides information to prepare cash budgets for multiple companies over 3 month periods. It includes data on monthly sales, purchases, wages, expenses and additional notes on credit terms, tax payments, and cash on hand. 2) Five problems/questions are presented with varying amounts of financial data and notes to develop 3 month cash budgets showing the company's expected cash position at the end of each month. 3) The cash budgets would forecast cash inflows from sales and outflows for purchases, wages, expenses, taxes, and other payments to determine if and when outside financing like overdraft facilities might be needed.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    of 4

    Cash Management

    Problems

    1) A company is expecting to have Rs. 32,000 cash in hand on 1/4/2014 and it requests you to
    prepare cash budget for the three months, April to June 2014. The following information is
    supplied to you :

    Month Sales (Rs) Purchases (Rs) Wages (Rs) Expenses (Rs)

    1) February 70,000 44,000 6,000 5,000

    2) March 80,000 56,000 9,000 6,000

    3) April 96,000 60,000 9,000 7,000

    4) May 1,00,000 68,000 11,000 9,000

    5) June 1,20,000 62,000 14,000 9,000

    Other information :

    (a) Period of credit allowed by suppliers is two months.


    (b) 25% of sales is for cash and the period of credit allowed to customers for credit sales is one
    month.
    (c) Delay in payment of wages and expenses one month.
    (d) Income tax Rs. 28,000 is to be paid on June 2014.

    Q2) XY Co. wishes to arrange overdraft facilities with bankers during the period April to June of a
    particular year, when it will be manufacturing mostly for stock. Prepare a cash budget for the above
    period from the following data, indicating the extent of the bank facilities, the company will require at
    the end of each month :
    (a)

    Month Sales (Rs) Purchases (Rs) Wages (Rs)

    February 1,80,000 1,24,800 12,000

    March 1,92,000 1,44,000 14,000

    April 1,08,000 2,43,000 11,000

    May 1,74,000 2,46,000 10,000

    June 1,26,000 2,68,000 15,000

    (b) 50% of the credit sales are realized in the month following the sales and the remaining sales in
    second month following.

    (c ) creditors are paid in the following month of purchase.

    (d ) Cash at bank on 1st April Rs. 25,000.

    Q3) From the following forecasts of income and expenditure, prepare a cash budget for the months
    January to April, 2014 :

    Months Sales (Cr.) Purchases (Cr.) Wages Manufacturing exp. Adm. Exp. Selling exp.

    2013 Nov. 30,000 15,000 3,000 1,150 1,060 500

    Dec. 35,000 20,000 3,200 1,225 1,040 550

    2014 Jan. 25,000 15,000 2,500 990 1,100 600

    Feb. 30,000 20,000 3,000 1,050 1,150 620

    Mar. 35,000 22,500 2,400 1,100 1,220 570

    Apr. 40,000 25,000 2,600 1,200 1,180 710

    Additional information is as follows :

    (a) The customers are allowed a credit period of 2 months.


    (b) A dividend of Rs. 10,000 is payable in April.
    (c) Capital expenditure to be incurred : Plant purchased on 15 th Jan for Rs. 5,000 ; a Building has
    been purchased on 1st march and the payments are to be made in monthly instalments of Rs.
    2000 each.
    (d) The creditors are allowing a credit of 2 months.
    (e) Wages are paid on the 1st of the next month.
    (f) Lag in payment of the other expenses is one month.
    (g) Balance of cash in hand on 1st Jan, is Rs. 15,000.

    Q4) From the following budget data, forecast the cash position at the end of April, May, and June 2014 :

    Month Sales (Rs) Purchases (Rs) Wages (Rs) Miscellaneous (Rs)

    February 1,20,000 84,000 10,000 7,000

    March 1,30,000 1,00,000 12,000 8,000

    April 80,000 1,04,000 8,000 6,000

    May 1,16,000 1,06,000 10,000 12,000

    June 88,000 80,000 8,000 6,000

    Additional information :

    (a) Sales - 20% realised in the month of sales, discount allowed 2%. Balance realised equally in two
    subsequent months.
    (b) Purchases - These are paid in the month following the month of supply.
    (c) Wages – 25% paid in arrears following month.
    (d) Miscellaneous expenses – Paid a month in arrears.
    (e) Rent – Rs. 1,000 per month paid quarterly in advance due in April.
    (f) Income-tax - First instalment of advance tax Rs. 25,000 due on or before 15 th June.
    (g) Income from investments – Rs 5000 received quarterly, in April, July etc.
    (h) Cash in hand – Rs.5,000 on 1st April 2014.
    Q5) From the following forecasts of income and expenditure, you are required to prepare a cash budget
    for three months ending 30th November. The bank balance on 1st September was Rs. 10,000.

    Month Sales (Rs) Purchases (Rs) Wages (Rs) Factory exp. Office exp.

    July 80,000 40,000 5,600 3,900 10,000

    August 76,500 42,000 5,800 4,100 12,000

    September 78,000 38,500 5,800 4,200 14,000

    October 90,000 37,500 5,900 5,100 16,000

    November 95,000 43,000 5,900 6,000 13,000

    A sales commission of 4% on sales, due in the month in which sales dues are collected is payable in
    addition to office expenses. Fixed assets worth Rs. 65,000 will be purchased in September to be paid in
    the following month. Rs. 20,000 in respect of debenture interest will be paid in October. The period of
    credit allowed to customers is two months and one month credit is obtained from supplies of goods.
    Wages are paid twice in a month on 1 st and 16th respectively. Expenses are paid in the month in which
    they are due.

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