Exercise-1

On 31 December 2012, the summary balance sheet of Bookland, booksellers, was as follows: Rs. Capital Creditors Proposed dividends 10, 00,000 5,00,000 75,000 15,75,000 Shop Equipment Stock of books Debtors Cash in bank Rs. 3,75,000 6,00,000 3,75,000 2,25,000 15,75,000

The following transactions are anticipated for the next three months: Credit Sales (Rs.) January 3,75,000 February 4,50,000 March 5,00,000 Additionally, you are informed: Cash Sales (Rs.) 3,50,000 1,25,000 3,00,000 Credit Purchase (Rs.) 6,00,000 5,75,000 6,75,000 Cash Purchase (Rs.) 50,000 25,000 25,000

A.Wages paid will be Rs. 25,000 per month. B.Postage and packing is to be 20% of credit sales, and paid in the month on sale. C.Debtors normally pay one month after books are sold to them. D.Creditors are paid one month after the receipt of books. E.Shop equipment will be replaced on 1 January. The new equipment will cost Rs. 6, 00,000 and Payment will be made in equal installment in February, March and April. The old equipment will Realize Rs. 2,00,000 in February. E. Depreciation of the new equipment will be 10% pa and charged to account monthly. F. Half the dividends proposed will be paid in March, half in July next. G.The Company expects a gross profit of 1/3 on selling price. Required: i) ii) iii) A cash budget for the three separate months ending 31 March 2013. A forecast trading and profit and loss account for the same three months in total only. A fore cast balance sheet as at 31 March 2013.

Exercise-2
Q-2 A limited company is formed to take over a running business. It has decided to raise Rs. 55 Lakhs by issuing equity shares, and balance of capital required in the first six months is to be financed by a financial institution against an issue of Rs. 5 Lakhs 8% debenture (interest payable annually) in its favour. Initial outlay consists of: Free hold premises Rs. 25 Lakhs Plant and Machinery Rs. 10 Lakhs Stock Rs. 6 Lakhs Vehicle and other items Rs. 5 Lakhs Payment on above item are to be made in the month of incorporation. Sales during the first sixc months ending on June 30 are estimated as under: January February March Lag in payment: Debtors Creditors Other Information: a) Preliminary expenses : Rs 50,000 (payable in February) b) General expenses: Rs. 50,000 per month ( at end of each month) c) Monthly wages and salaries (payable on the 1st day of the next month): Rs 80,000 for the first three months Rs 95,000 thereafter. d) Gross profit rate is expected to be 20% on sales. e) The shares and debentures are to be issued on 1st January. f) The stock level throughout is to be the same as the outlay. Prepare a cash Budget, and a Projected Trading and Profit and loss account for the six months ended June 30 and projected balance sheet at that date. Rs. 14.00 Lakhs Rs. 14.00 Lakhs Rs. 18.50 Lakhs April May June Rs. 25.00 Lakhs Rs. 26.50 Lakhs Rs. 28.00 Lakhs

2 months 1 months