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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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