New Vision Trading Company Ltd. is planning to arrange for a six monthly overdraft facility with a bank. However, before finalization of any arrangement it wants to know the estimated requirements of cash. For this purpose it has hired you as consultant to make an estimate of the foreseeable cash requirements.

The following is the basic data regarding various business cycles of the company:

1.Sales forecast for the six months are as under:

MonthsRs.

January800,000

February 950,000

March600,000

April900,000

May1,100,000

June600,000

2.Purchases are made as and when required

3.No closing stock is maintained as the supplier has capability to supply any quantities at any time.

4.Gross profit ratio is maintained @ 20% of the sales price.

5.Various expenses for the six months are as under:

Rs.

Salaries and wages390,000

Repair and maintenance120,000

Insurance6,000

Stores and spares270,000

Duties360,000

Legal Charges24,000

6.Recoveries from the debtors are made as follows:

50% in the month of sale

30% in the month following the month of sale

20% in the second month after sales

7.Trade creditors are paid as under:

40% in the month of purchase

40% in the month following the month of purchase

20% in the second month after purchase

8.All other business expenses are paid in the month of expense. Expenses are evenly spread throughout the year.

9.The company commenced its business on 1.1.2000 with a cash balance of Rs.50,000.

Required:

Prepare cash budget for the next six months