ABC Company Ltd manufactures razor blades. Its estimated sales for period January 2010 through June 2010 are as follows: Rs.100, 000 per month from January through March and Rs.120, 000 per month from April through June. The sales for November and December of the previous year have been Rs.100, 000 each. Cash and credit sales are expected to be 20% and 80% respectively. The receivables from credit sales are expected to be collected as follows: 50% of receivables, on an average, one month from the date of sale and the balance 50%, on an average, two months from the date of sale. No bad debts losses are expected to occur. Other anticipated receipts are:
(i) Rs.5, 000 from the sale of a machine in March, and
(ii) Interest of Rs.2, 000 on securities in June.
The company plans to purchase materials worth Rs.40, 000 in January and February and materials worth Rs.48, 000 each month from March through April. The payments for these purchases are made approximately a month after the purchase. The purchases for December of the previous year have been Rs.40, 000 for which payment will be made in January 2010. Miscellaneous cash purchases of Rs.2, 000 per month are planned from January through June. Wage payments are expected to be Rs.15, 000 per month, January through June; general administrative and selling expenses are expected to be Rs.10, 000 per month. Dividend payment of Rs.20, 000 and tax payment of Rs.20, 000 are scheduled in June 2010. A machine worth Rs.50, 000 is proposed to be purchased on cash in March 2010.
Cash balance on 1st
January 2010 is Rs.22, 000 and the minimum cash balance required by the company is Rs.20, 000.
(i) Prepare budgets for cash receipts and payments.
(ii) Based on the receipt and payments computed above, prepare a summarised budgeted cash account.