HASF PVT.LTD

BUDGETED INCOME STATEMENT

FOR 1^st QUARTER 1999

Description JANUARY FEBRUARY MARCH

Sales 285,000 323,000 221,000

Purchases 129,000 168,000 95,000

Wages 35,000 37,000 30,000

Supplies 26,000 23,000 21,500

Utilities 6,500 8,700 7,200

Rent 15,000 12,800 13,600

Insurance 12,000 12,000 12,000

Advertising 24,500 28,500 18,000

Depreciation 20,000 20,000 20,000

Net Profit 17,000 13,000 3,700

Required:

a.Please make a cash budget for the months of January, February and March 1999 based on the data for: (5 Marks)

View Receivable Trend:

30% of Sales are collected in the month of sale

30% of Sales are collected after the month of sale

40% of Sales are collected two months after the sale is made

View Payable Trend:

10% of Purchases are paid for in the month of purchase

35% of Purchases are paid after the month of purchase

55% of Purchases are paid two months after the purchase is made

Additional Information:

Rent and Insurance expense were prepaid at the end of 1998

All other expenses are paid for in the month they were incurred

November Sales = 195,000

November Purchases = 100,000

December Sales = 250,000

December Purchases = 165,000

Please see attached Budgeted Income Statement for 1st Quarter 1999

Being a CFO of the company, interpret the importance budget in strategic and operational planning of the company