Prepare Cash Budget of DADA Bhagwan …
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Prepare Cash Budget of DADA Bhagwan Co Ltd for three months ending 31st
December 2020 from the following information. 17.5
Month Opening Stock Purchases Production Exp
Sep-20 35000 420000 70000
Oct-20 52500 490000 87500
Nov-20 87500 560000 105000
Dec-20 105000 630000 122500
Jan-21 96250 700000 140000
Additional Information:
1 Estimated cash balance as of 1st Oct 2020 is 105000
2 Materials are purchased on cash as well as credit terms. In cash terms, a 5% rebate is
offered by suppliers. Credit purchase is estimated at 60% of the total purchase.
3 In sales, 40% of sales are on a cash basis. Discount of 5% is allowed to customers also on
cash sales. Credit sales are realised in a subsequent month.
4 A machine costing Rs 175000 is to be purchased on Nov 20 by instalments, the payment of
which is to be paid 20% at the time of agreement and remaining is to be paid by four equal
monthly instalments with 12% interest p.a.
5 Payments: Income tax – 210000 – November
Bonus - 210000 – December
6 Others: i) Rate of Gross Profit is 50% on cost.
ii) Depreciation of Rs 17500 per month is included in production expense.
iii) Time Lag: Credit Purchase – ½ Month
Production Expense – ¼ Month
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