Question
n the fourth quarter of 2019, Bhasin Wheels had the following net income: SalesRs.400,000 Less cost of sales150,000 Gross margin250,000 Selling and administration costs110,000 Income
n the fourth quarter of 2019, Bhasin Wheels had the following net income:
SalesRs.400,000
Less cost of sales150,000
Gross margin250,000
Selling and administration costs110,000
Income before taxes140,000
Income taxes42,000
Net incomeRs.98,000
Purchases in the fourth quarter of 2019 amounted to Rs.170,000. Estimated data for 2020 is as follows:
FirstSecondThirdFourth
QuarterQuarterQuarterQuarter
SalesRs.300,000Rs.350,000Rs.400,000Rs.450,000
Cost of sales170,000200,000230,000150,000
Purchases200,000230,000250,000280,000
Selling and admin.110,000110,000110,000110,000
Taxes are 30% of pretax income and are paid in the month of accrual.
All sales are on credit and 30% are collected in the quarter of sale and 70% are collected in the next quarter.
40% of purchases are paid in the quarter of purchase and 60% in the next quarter.
Selling and administrative expenses are paid in the quarter incurred.
There is Rs.11,000 of depreciation included in selling and administrative expense.
A capital expenditure for Rs.40,000 is planned for the fourth quarter of 2020.
have to prepare cash disbursements budget for the second quarter of 2020.
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