Question 3

a)RJ Enterprises is in the Business of manufacturing agro equipment.

Prepare the cash budget for the quarter October to December, based upon the following data and additional information.

Month

Sales

Wages

Selling Overheads

Production Overheads

$

$

$

$

July

78,000

9,000

3,350

6,580

August

74,500

9,400

4,300

6,920

September

88,000

9,900

3,610

6,440

October

62,000

7,000

3,510

6,880

November

78,500

10,600

3,400

7,000

December

98,600

8,000

3,250

7,680

Additional Information :

a.The Cash balance at 1 October is $ 210,000.

b.Sales are realized in the respective month.

c.A plot of land was purchased in October $ 48,500

d.Wages are paid one month in arrear and all overheads are settled in the month in which they are incurred.

e.RJ Enterprises is due to repay a loan of $ 6500 in November.

f.A dividend of $ 25,000 is expected to be received in November.

b) A budget is a financial plan for the future concerning the revenues and costs of a business. List out the Advantages & Limitations of Budget.