Management Accounting

Problems on Cash Budget:

1. From the following information prepare cash budget for 3 months ending 30 th Sept,
2018.

Months Sales Wages Purchase Expenses

June 2,00,000 20,000 1,30,000 10,000
July 1,50,000 30,000 1,40,000 10,000
August 2,50,000 20,000 1,60,000 15,000
September 2,20,000 15,000 1,80,000 15,000

Additional Information:
a. Opening cash balance on 1st July is 60,000
b. Debtors pays in the month of following month of sales.
c. Creditors are paid in the month following the month of purchase.
d. Expenses are paid in the same month.
e. Assume that wages are paid on monthly basis on first of next month.

2. Prepare cash budget of the company for 3 months from April to June

Months Credit Wages Credit Selling Overheads

Sales Purchase Expenses
January 1,60,000 32,000 85,000 8,000 10,000
February 1,85,000 37,000 92,000 9,500 11,500
March 2,10,000 42,000 1,00,000 10,500 13,000
April 2,45,000 49,000 1,20,000 12,500 14,500
May 1,78,000 35,000 90,000 8,900 10,500
June 1,82,000 36,000 98,000 9,000 11,000
Additional Information:
a. Period of credit allowed to debtors is 2 months.
b. Period allowed by creditors is 1 month.
c. Lag in payment of wages, selling expenses and overheads is 1 month.
d. Expected cash sales Rs. 15,000 per month
e. Expenditure on machinery is payable in April is Rs. 50,000
f. Expected cash balance in April Rs. 10,500

Asst. Prof. Apoorva, Department of Commerce, SCCMC Page 1

 Management Accounting

QP – 2018 – 14 Marks

3. A company is expecting to have 16,000 cash in hand on 1st April, 2021 and it request
you to prepare cash budget for 3 months i.e., from April to June

Months Sales Purchases Wages Expenses

February 35,000 22,000 3,000 2,500
March 40,000 28,000 4,500 3,000
April 48,000 30,000 4,500 3,500
May 50,000 34,000 5,500 4,500
June 60,000 31,000 7,000 4,500
Additional Information:
a. Period of credit allowed by suppliers is 2 months.
b. 25% of sales is for cash and period of credit allowed to customers for credit
sales is 1 month.
c. Delay in payment of wages and expenses is 1 month.
d. Income Tax Rs. 14,000 is to be paid in June 2021

QP – 2017 – 14 Marks

4. Prepare cash budget for 3 months from April to June.

Months Sales Purchase Wages

February 1,80,000 1,24,800 12,000
March 1,92,000 1,44,000 14,000
April 1,08,000 2,43,000 11,000
May 1,74,000 2,46,000 10,000
June 1,26,000 2,68,000 15,000

Additional Information:
a. 50% of credit sales are realized in the month of following sales and remaining
50% second month in the following.
b. Creditors are paid in the month following the month of purchase.
c. Estimated cash balance on 1st April is Rs. 25,000

Asst. Prof. Apoorva, Department of Commerce, SCCMC Page 2

 Management Accounting

QP – 2019, 2022 – 14 Marks

5. A manufacturing company is expecting to have Rs. 75,000 cash in hand on 1-4-2018

and it requested you to prepare a cash budget for three months April to June 2018. The
following information is supplied to you:
Months Sales Purchase Wages Overheads
February 14,000 9,600 3,000 1,700
March 15,000 9,000 3,000 1,900
April 16,000 9,200 3,200 2,000
May 17,000 10,000 3,600 2,200
June 18,000 10,400 4,000 2,300
Additional Information:
a. Period of credit allowed by suppliers is 2 months.
b. 25% of sales is for cash and period of credit allowed to customers for credit
sales is 1 month.
c. Delay in payment of wages and expenses is 1 month.
d. Income Tax Rs. 25,000 is to be paid in June 2018

QP – 2021 – 14 Marks

6. Manish Co. is expecting to have 25,000 cash in hand on 1st April 2021 and it requires
you to prepare cash budget for the 3 months, April to June 2021. The following
information supplies to you.

Months Sales Purchase Wages Overheads

February 70,000 40,000 8,000 6,000
March 80,000 50,000 8,000 7,000
April 92,000 52,000 9,000 7,000
May 1,00,000 60,000 10,000 8,000
June 1,20,000 55,000 12,000 9,000
Additional Information:

a. Period of credit allowed by suppliers is 2 months.

b. 25% of sales is for cash and period of credit allowed to customers for credit
sales is 1 month.
c. Delay in payment of wages and expenses is 1 month.
d. Income Tax Rs. 25,000 is to be paid in June 2021.
Asst. Prof. Apoorva, Department of Commerce, SCCMC Page 3
 Management Accounting

7. Cash budget for 4 months from March to June. Following information is available:

Months Sales Purchase Wages Overheads

January 20,000 20,000 4,000 4,000
February 22,000 14,000 4,400 4,200
March 28,000 14,000 4,600 4,300
April 36,000 22,000 4,600 4,500
May 30,000 20,000 4,000 4,100
June 40,000 25,000 5,000 4,800

Additional information:

a. Cash balance on 1st March, is Rs. 10,000

b. New machinery is to be installed at a cost of Rs. 20,000 in the month of February
which is to be paid in two equal installments in March and April.
c. Rs. 12,000 is to be collected in March as second call money.
d. Period of credit allowed by creditors is 2 months and allowed to customers is 1
month
e. 50% of sales and purchase are for cash
f. Delay in payment of wages is half month

8. Prepare cash budget from the following information

Months Sales Purchase

Nov 2017 80,000 -
Dec 2017 90,000 60,000
Jan 2018 75,000 55,000
Feb 2018 75,000 45,000
Mar 2018 80,000 55,000
Additional information:

a. Analysis of records shows that the debtors settle according to the following pattern:
60% within the month of sales, 25% in the following month, and remaining 15%
in the month following.
b. All the purchases are on credit and the past experience shows that 90% are settled
in the month of purchase and the balance in the following month.
c. Opening balance on Jan 2018 Rs. 30,000
Asst. Prof. Apoorva, Department of Commerce, SCCMC Page 4
 Management Accounting

9. A company expects Rs. 25,000 in bank on 1-5-2018 and requires you to prepare cash
position during 3 months from May to July

Months Sales Purchase Wages Office Factory Selling

Expense Expense Expense
March 50,000 30,000 6,000 4,000 5,000 3,000
April 56,000 32,000 6,500 4,000 5,500 3,000
May 60,000 35,000 7,000 4,000 6,000 3,500
June 80,000 40,000 9,000 4,000 7,500 4,500
July 90,000 40,000 9,500 4,000 8,000 4,500
Additional information:

a. 20% of sales are for cash and remaining amount is collected in the month of
following sales.
b. Supplier supply the goods at 2 months credit
c. Wages and other expenses are paid in the month following the month in which they
are incurred
d. Company pays dividend to the shareholders and bonus to workers at Rs. 10,000 and
Rs. 15,000 respectively in the month of May.
e. Plant has been ordered and it is expected to receive in June. It will cost Rs. 80,000 to
be paid in June.
f. IT is payable in the month of July Rs. 25,000

10.Cash balance on 1st April 2017 is Rs. 37,500

Months Sales Purchase Wages Overheads

February 75,000 45,000 9,000 18,000
March 84,000 48,000 9,750 18,750
April 90,000 52,500 10,500 20,250
May 1,20,000 60,000 13,500 23,820
June 1,35,000 60,000 14,250 28,000

Additional information:

a. Period of credit allowed by suppliers is 2 months.

b. 20% of sales is for cash and period of credit allowed to customers for credit sales
is 1 month.
Asst. Prof. Apoorva, Department of Commerce, SCCMC Page 5
 Management Accounting

c. Delay in payment of all expenses is 1 month

d. Income Tax of Rs. 57,500 is due to be paid on 15th June 2017
e. The company is to be paid dividend to shareholders and bonus to workers Rs.
15,000 and Rs. 22,500 respectively in the month of April.
f. Plant has been ordered to be received and paid in May Rs. 1,20,000

11.From the following information prepare cash budget for 3 months.

Months Sales Purchase Wages Overheads

January 30,000 20,000 5,500 3,100
February 28,000 24,000 5,800 3,300
March 32,000 25,000 6,000 3,400
April 40,000 28,000 6,200 3,600
May 42,000 31,000 6,500 4,300
June 38,000 25,000 7,000 4,000

Additional information:

a. Cash balance on 1st April, is Rs. 10,000

b. Materials and Overheads are paid during the month following the month of supply.
c. Wages are paid during the month.
d. Credit sales are paid by the end of the following month of sales and other being
paid during the next month.
e. Sales commission 5% on sales is to be paid within the month following month of
actual sales.
f. Preference shares dividend of 10% on capital of Rs. 3,00,000 to be paid in May
g. Plant and machinery are to be installed in May at a cost of Rs. 10,000 will be
payable in June
h. 10% on calls on equity share capital of Rs. 2,50,000 are due on 1 st April and 1st
June.

Asst. Prof. Apoorva, Department of Commerce, SCCMC Page 6

 Management Accounting

12.Prepare cash budget from March to July from the following information.

Months Sales Purchase Wages Office Factory Selling

Expense Expense Expense
January 85,000 38,000 7,000 3,000 5,000 3,500
February 80,000 40,000 8,000 2,500 6,000 4,500
March 91,000 44,000 8,800 2,600 4,000 3,500
April 76,000 45,000 6,000 3,350 5,500 4,800
May 74,000 39,000 9,000 2,700 6,000 4,400
June 98,000 48,000 8,000 2,800 4,600 4,000
July 91,000 35,000 7,000 2,500 4,000 5,000
August 1,20,000 28,000 8,500 2,800 4,800 4,500
Additional information:

a. Opening cash balance on 1st Mar, 2018 Rs. 12,000

b. Period of credit allowed to customers and suppliers is one month
c. Delay in payment of all other expenses is one month
d. Machinery purchased for Rs. 22,000 in March and payable on delivery made on
April 2018
e. Building purchased for Rs. 85,000 payables in 2 equal installments in May and
July
f. 5% commission on sales payable after 2 months of sales.

Asst. Prof. Apoorva, Department of Commerce, SCCMC Page 7