Q1. Estimate the cash requirement of Fruit Co. Ltd. For June 2015 on the basis of data given below:
(i) Sales -
February 2015
Rs. 25,000
March 2015
Rs. 20,000
April to June 2015
Rs. 30,000 per month
Roughly half the sales are for cash. 90% of credit sales are collected in the month following the month of sale and the balance one month later.
(ii) fruits are always bought for cash to avail cash discount of 5%. The purchase budget for the second quarter (April – June) was 15,000 baskets per month at Re. 1 per basket.
(iii) wages and salaries for second quarter were budgeted at Rs. 5,000 per month.
(iv) manufacturing and other expenses budget for the quarter: -
Cash expenses
Rs. 4,500
Selling expenses
Rs. 3,000
Administrative expenses
Rs. 2,000 (April & May only)
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Estimate the cash Budget of Fruit Co. Ltd. For June 2015 on the basis of data given below:
opening balance of cash in February Rs.10000
(i) Sales
February 2015Rs. 25,000
March 2015Rs. 20,000
April to June 2015Rs. 30,000 per month
Roughly half the sales are for cash. 90% of credit sales are collected in the month following the month of sale and the balance one month later.
(ii) fruits are always bought for cash to avail cash discount of 5%. The purchase budget for the second quarter (April – June) was 15,000 baskets per month at Re. 1 per basket.
(iii) wages and salaries for second quarter were budgeted at Rs. 5,000 per month.
(iv) manufacturing and other expenses budget for the quarter: -
Cash expensesRs. 4,500
Selling expensesRs. 3,000
Administrative expensesRs. 2,000 (April & May only)
Concept:
The cash budget incorporates data from every other budget, including cash receipts from the sales budget, cash disbursements from the budget for direct materials, cash disbursements from the budget for direct labour, manufacturing overhead, and cash receipts from the budget for selling administrative expenses.
Other cash inflows from sources like the sale of plant assets, the issuing of stock, or the issuance of bonds may also be included.
Other sources of cash outlays, such as the acquisition of plant assets and the payment of cash dividends, may also be included.
Given:
- Opening balance of cash in February 10000
- sales in different months
- purchases in different months
- expenses in different months
Find: prepare cash budget to calculate the cash requirement in June.
Solution: refer image on cash budget.
Hence, the closing balance of cash in June is Rs. 116750
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