BUSINESS FINANCE

EXAM IN CASH BUDGET

SY 2019 – 2020

NAME: _________________________________________ SCORE: _____________________

3. The directors of Kingston & Co. were concerned about the company’s cash flow. They requested their accountant
to prepare a cash budget for the four months ending 30 April 2016.

(i) The following sales figures are for the months of November 2015 to June 2016. The figures from January
2016 onward are estimated:

Actual Sales in Peso

Half the sales are normally paid for in the month in which they occur and the customers are rewarded with a 5% cash
discount. The remaining sales are paid for net in the month following the sale.

(ii) Goods are sold at a mark-up of 25% on the goods purchased one month before sale. Half of the purchases are paid
for in the month of purchase and a 4% prompt settlement discount is received. The remainder is paid in full in the
following month.

(iii) Wages of Php.12000 per month are paid in the month in which they are earned. It is expected that the wages will
be increased by 10% from 1 March 2016.

(iv) Rent will cost Php. 60000 per annum payable three monthly in advance in January, April, July and December each
year.

(v) The directors have arranged a bank loan of Php. 60000 which would be credited to company’s current account in
February 2016.

(vi) The half-yearly interest on 200000, 8% debentures of $1 each is due to be paid on 15 January 2016.

(vii) The ordinary dividend of Php. 12000 for the year 2015 will be paid in March 2016.

(viii) The bank balance at 31 December 2015 is Php. 12000.

Required:

Prepare a cash budget for the four months ended 30 April 2016. Give your answers to the nearest peso.