James Baduong LTD was incorporated on the 1/6/2006. The opening balance sheet of the company was as follows: Assets Cash at Bank 984, 000,000 Share Capital 60,000 ordinary shares of 16,400 each 984,000,000 During June the company intends to make payments of GHS656, 000,000 for a freehold property, GHS164, 000,000 for equipment and GHS98, 400,000 for a motor vehicle. The company will also purchase an initial trading stock costing GHS360, 800,000 on credit.

The company has produced the following estimates:

i. Sales for June will be GHS131, 200,000 and will increase at the rate of GHS49, 200,000 per month until September. In October sales will rise to GHS360, 800,000 and this will be maintained for the subsequent months.

ii. The Gross Profit Margin on goods sold will be 25%

iii. There is a risk that supplies of trading stock will be interrupted towards the end of the accounting year. The company, therefore, intends to build up its initial level of stock (GHS360, 800,000) by purchasing GHS16, 400,000 of stock each month in addition to the monthly purchases necessary to satisfy monthly sales. All purchases of stock (including the initial stock will be on one months credit).

iv. Sales will be divided equally between cash and credit sales. Credit customers are expected to pay two months after the sale is agreed.

v. Wages and salaries will be GHS14, 760,000 per month. Other overheads will be GHS8,200,000 per month for the first four (4) months and GHS10,660,000 thereafter. Both types of expenses will be payable when incurred.

vi. 80% of sales will be generated by sales people who will receive 5% commission on sales. The commission is payable one month after the sale is agreed. The company intends to purchase further equipment in November 2006 for GHS11, 480,000 cash.

vii. Depreciation is to be provided at the rate of 5% per annum on freehold property and 20% per annum on equipment.(depreciation has not been included in the overheads mentioned above in (V) above)

You are required to prepare a cash budget for James Baduong LTD for the six month period to 30/11/2006.