Reference no: EM133121888

Milk Mantra is facing a liquidity crunch. To handle the situation you are preparing a cash budget from January to March, 2022. You have the following information: Estimated sales for January are Rs 550,000 and February and March are 660,000 and 700,000 respectively. Actual sales for November and December have been 520,000 and 545,000 respectively. The firm makes 80 percent of its sales on a 30 day credit basis and remaining on cash. Dividend of Rs.30000 will be paid in March. Estimated purchases of materials are Rs 300,000 for January, Rs 370,000 for February and Rs 250,000 for March. The purchases for the month of December have been Rs 160,000. 50% Payments to creditors for material purchases are delayed by one month and the rest 50% in the same month. Sales commission at 3 percent of sales will be paid to the salesman each month. An asset has to be acquired in January for Rs 100,000. Salaries, wages and overheads of Rs 250,000 are planned from January to March. Prepare an estimated cash budget for 3 months from January to March and show the surplus and deficit. The cash balance as on lst January is Rs 30,000.