Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Q4. (15 Marks) From the following information, prepare cash budget of a business firm for the month of April. (a) The firm makes 20 per

image text in transcribed

image text in transcribed

Q4. (15 Marks) From the following information, prepare cash budget of a business firm for the month of April. (a) The firm makes 20 per cent cash sales. Credit sales are collected 40, 30 and 25 per cent in the month of sales, month after and second month after sales, respectively. The remaining 5 per cent becomes bad debts. (b) The firm has a policy of buying enough goods cach month to maintain its inventory at two and one-half times the following month's budgeted sales. (c) The firm is entitled to 2 per cent discount on all its purchases if bills are paid within 15 days and the firm avails of all such discounts. Monthly purchases are made in two equal lots on fortnightly basis. (d) Cost of goods sold, without considering the 2 per cent discount, is 50 per cent of selling prices. The firm records inventory net of discount. () Other data is: Sales(Rs) January (actual) 1,00,000 February (actual) 1.20,000 March (actual) 1,50,000 April (budgeted) 1,70,000 May (budgeted) 1,40,000 Inventory on March 31, Rs 2,25,400. Cash on March 31, Rs 30,000. Gross purchases in March, Rs 1,00,000. Selling, general and administrative expenses budgeted for April, Rs 45,000 (includes Rs 10,000 depreciation)

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Financial And Managerial Accounting

Authors: Carl S. Warren, Jefferson P. Jones, William B. Tayler

15th Edition

1337902667, 9781337902663

More Books

Students also viewed these Accounting questions

Question

=+f) Are any six points in a row increasing (or decreasing)?

Answered: 1 week ago