Question 1

CHH is a building supplies company that sells products to trade and private customers. Budget data for each of the six months to March are given below:

	Oct 000	Nov 000	Dec 000	Jan 000	Feb 000	March 000
Credit sales	250	250	250	260	260	280
Cash sales	60	60	65	75	80	90
Credit purchases	170	180	180	200	200	200
Other operating costs (including 20,000 of depreciation each month)	90	90	90	122	123	123

• 80% of the value of credit sales is received in the month after sale, 10% two months after sales and 8% three month after sale. The balance is written off as a bad debt.
• 75% of the value of credit purchase is paid in the month after purchase and the remaining 25% is paid two months after purchase.
• All other operating costs are paid in the month they are incurred.
• CHH has placed an order for four new forklift trucks that will cost 25,000 each. The scheduled payment date is in February.
• The cash balance at 1 January is estimated to be 15,000.

Required:

1. Prepare a cash budget for each of THREE months of January, February and March.
2. Prepare a profit and loss for the quarter ending 31^st March