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problem 1: Dooley Ltd started business on 1st November 2011. The proposals and approximations for the next three months to 31st January 2012 are as shown below:

A) The company will issue 15000 Rs 1 shares on 1st November 2011, on which date all amounts are due to be paid in full.

B) Fixtures and fittings costing Rs 4000 will be bought and paid for on 1st November 2011.

C) Five delivery vans costing Rs 3000 each are to be bought on 1st November 2011. A deposit of Rs 400 cash on each van is needed. The balance is to be paid in eight equivalent installments starting on 30th November 2011. Avoid interest payments.

D) An initial stock of goods is to be bought on 1st November 2011 at a cost of Rs 22500 (Rs 3 per unit) and subsequent purchases at Rs 3 per unit are to be made and hence this stock level is maintained at the end of each month.

Suppliers are paid throughout the month following purchase.

E) All sales are on credit at Rs 5 per unit and the estimated sales are:

November        6 000 units 
December        7 000 units 
January            8 000 units

Debtors will pay in the second month after the month of sale.

F) Administration expenditures are expected to be 20% of sales and are paid throughout the month in which they are incurred.

G) Avoid depreciation all through this exercise.

Required: A cash budget for three months ended 31st January 2012.

Cost Accounting, Accounting

  • Category:- Cost Accounting
  • Reference No.:- M96727

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