The estimated sales,CAST STUDY  solution

CASE STUDY - 2
Prepare the cash budget for July-December from the following information. The estimated sales, expenses etc are given below:

Additional Information:

1. 20% of the sales are on cash and the balance on credit.

2. 1% of the credit sales are returned by the customers, 2% of debts are uncollectible, 50% of the good account receivables are  collected in the month of the sales and the rest during next month.

3. The time lag in payment of miscellaneous expenses and purchases is one month. Wages and salaries are paid fortnightly with a time lag of 15 days.

4. The company keeps minimum cash balance of Rs 5 lakh. Cash in excess of Rs 7 lakhs is invested in Government securities in the multiples of Rs 1 lakh. Shortfalls in the minimum cash balance are made good by borrowings from the banks. Ignore interest received and paid.