Mohammad Imtiaz Khan, FCA 7 1 | Page Problem on Cash Budget-1 ABC Company Limited has the following information: Taka Cash balance, 30 June 2016 50000 Dividends paid July 60000 Cash payment for operating expenses in July 185500 Depreciation in July 12000 Cash collections from sales in July 510000 Merchandise purchases for cash in July 180000 Purchase equipment for cash in July 94500 Scrap value of disposed assets in July 35000 Dividend collection from Investment in July 66000 Security deposit for electricity connection in July 102500 ABC Company Limited wants to maintain a minimum cash balance of Taka 50000. Assume that borrowing occurs at the beginning of the month and repayments occur at the end of the month. Interest of 1% per month is paid in cash at the end of each month debt outstanding. Borrowing and repayment is carried out in multiples of Tk 1000. Required: Prepare a cash budget for the month of July 2016. Ans: Cash balance at the end of July is 38500 Taka and borrowing would be 12000 taka i.e. Balance 50500 taka at the end of July 2016. Problem on Cash Budget-2 Prestige CoŵpaŶLJ, a seller of Pressure Đooker, has ďudgeted it’s activity for March 2017. The budget information is presented below: I. Sales are Tk. 550,000. All sales are cash. II. Merchandise inventory on February 28 is Tk. 300,000 III. Budgeted depreciation for March Tk. 35,000 IV. Cash at bank on March 1 is Tk. 25,000 V. Selling & Administrative expenses are budgeted at Tk. 60,000 for March and are paid in cash. VI. The planned merchandise inventory on March 31 is Tk. 270,000 VII. The invoice cost for merchandise purchase represents 75% of sales price. All purchase are paid for in cash. From the above information calculate budgeted cash receipts, cash disbursements and Net income of Prestige Company for the month of March 2017. Ans: Cash receipts: Tk. 550,000; Cash disbursements: Tk. 442,500 and Net Income: Tk. 42,500