On 30th September, 2009 the balance sheet of “M” Ltd (retailer) was as under:

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On 30th September, 2009 the balance sheet of “M” Ltd (retailer) was as under:

Rs.

Rs.

Equity – 2000 shares

20,000

Equipment (at cost)

20,000

Reserves

10,000

Less: depreciation

5,000

Trade creditors

40,000

15,000

Proposed dividend

15,000

Stock

20,000

Trade debtors

15,000

Balance at bank

35,000

85,000

85,000

The company is developing a system of forward planning and on 01st October 2009 it supplies the following information.

Month

SalesPurchases

Credit

Credit

Cash

September, 2009 (Actual)

15,000

14,000

40,000

October, 2009 (Budget)

18,000

5,000

23,000

November, 2009 (Budget)

20,000

6,000

27,000

December, 2009 (Budget)

25,000

8,000

26,000

All trade debtors are allowed one month’s credit and are expected to settle promptly. All trade creditors are paid in the months following delivery.

On 01st October, 2009, all equipments were replaced at a cost of Rs.30,000.Rs.14,000 was allowed in exchange for the old equipment  and a net payment of Rs.16,000 was made.

The proposed dividend will be paid:

Wages Rs.3,000 per month

Administration Rs.1,500 per month

Rent Rs.3,600 for the year upto 30th September, 2010 (to be paid in October, 2009)

You are required to prepare a cash budget for the months of October, November and December 2009.

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