account for making estimates. Since this method is based on the concept of cash accounting, accruals and adjustments obviously cannot find place in the preparation of cash budgets. The opening balance of cash of a period and the estimated cash receipts are added and from this, the total of estimated cash payments are deducted to find out the closing balance. Illustration 1 Prepare a cash budget of Mis Novan Television & Co. on the basis of the following information for the first six months of 2014: (a) Cost and prices unchanged. 37 (6) Cash sales - 25% and credit sales - 75%. (C) 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. (d) Sales forecasts are as follows: October 2013 12,00,000 March 2012 8,00,000 November 2013 14,00,000 April 2012 12,00,000 December 2013 16,00,000 May 2012 10,00,000 January 2014 6,00,000 June 2012 8,00,000 February 2014 8,00,000 July 2012 12,00,000 (e) Gross profit margin 20%. (9) Anticipated purchases: January 2014 6.40,000 February 2014 6.40.000 March 2014 9,60,000 April 2014 8,00,000 May 2014 6,40,000 June 2014 9,60,000 (g) Wages and Salaries to be paid: January 2014 1,20,000 February 2014 1,60,000 March 2014 2,00,000 April 2014 2,00,000 May 2014 1,60,000 June 2014 1,40,000 (h) Interest on 210,00.000 @ 12% on debentures is due by the end of March and June. Excise deposit due in April 22,00,000. Capital expenditure on plant and machinery planned for June 21,20,000. (k) Company has a cash balance of 24,00,000 at 31.12.2013. 0 Company can borrow on monthly basis. (m) Rent is 28,000 per month