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Please do asap!!! The following information relates to Paco Limited. (i) Sales and purchases for the four months from January to April 2021 are budgeted
Please do asap!!!
The following information relates to Paco Limited. (i) Sales and purchases for the four months from January to April 2021 are budgeted as follows: Month January February March April Sales (Rs) Purchases (Rs) 62,500 25,000 70,000 20,000 75,000 30,000 82,500 37,500 40% of sales are to cash customers who are entitled to a cash discount of 2%. One month's credit is allowed on the remainder. (ii) The company pays 40% of its purchases in the month following purchase and obtains a discount of 1%. The balance is paid in the second month. Purchases are expected to be Rs22,000 and Rs24,000 for November and December 2020 respectively. (iii) Selling and distribution expenses amount to 10% of sales and are paid in the month in which they are incurred. (iv) Administration expenses amount to Rs 30,000 per quarter and are paid on a monthly basis. (v) Additional plant and machinery costing Rs40,000 will be purchased on in February 2021, and paid in March 2021. (vi) A subscription fee of Rs15,000 for 6 months to 30 June 2021 will be paid on 1 January 2021. (vii) Trade receivables on 1st January 2021 are expected to be Rs42,500 and cash Rs20,750. Required: Prepare a cash budget for the four months ending 30th April 2021. (20 marks)Step by Step Solution
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