8 From the following particulars of Hypothetical Ltd, prepare a cash budget (`in lakh): All sales are made on terms that allow a cash discount for payment within 20 days; if the discount is not taken,...

8 From the following particulars of Hypothetical Ltd, prepare a cash budget (`in lakh):

All sales are made on terms that allow a cash discount for payment within 20 days; if the discount is not taken, full payment may be made in 40 days. However, the experience has been that on 20 per cent of sales, payment is made during the month in which sales are made; on 70 per cent of the sales, payment is made during the second month and on the balance 10 per cent of sales, payment is made during the third month. Materials amount to 70 per cent of sales and are bought in the month before the firm expects to sell the finished goods. Its purchase terms permit the company to delay payment for one month. The firm has to pay tax of `4 lakh on September 15 and on December 15. Assume the firm needs to keep a minimum cash balance of `5 lakh in hand at all times. It is assumed to have an opening cash balance of `6 lakh on July 1. Estimate the firm’s requirements of cash for the period from July to December.