Datem Inc. is planning to request a line of credit from its bank. The bank requires them to submit a cash budget. Their Credit and Collection Department stillateu collections of sales as follows: collected within the month of sale, 20%; collected the month following the sale, 80% Payments for labor and raw materials are typically made during the month following the month in which these are incurred. The Production Department estimated total labor and raw material costs for each month as follows: (in P000) Aug Nov 980 480 The Marketing Department has drawn the following sales forecasts for parts of 1995 and 1996: (in P'000) May '95 June July Aug Sept Oct 1200 1,800 2.400 1.200 600 600 May 95 June 290 290 July 440 Sept 600 Oct 560 Dec 190 Nov Dec 1,200 300 Jan '96 150 Other projections include: general, selling and administrative expense will amount to approximately P112, 5000 a month; lease payments under long-term lease contracts will be P87,500 a month depreciation charges will P150,000 a month; miscellaneous expense will be P111,500 a month; income tax of P450,000 will be due in June, September and December, and a progress payment of P1,200,000 on a new database server must be paid in September. Cash on hand on June 30 will amount to P225,000, and a minimum cash balance of P210.000 must be maintained throughout the cash budget period. Cash at beginning of June is P676,500 How much cash can potentially be invested in November?

A master budget can be defined as an estimation of the revenue earned or expenses incurred over a specified period of time in the future and it is generally prepared on a periodic basis which can be either monthly, quarterly, half-yearly, or annually. It…

A budget is a financial plan designed by an undertaking for a definite period in future which acts as a major contributor towards enhancing the financial success of the business undertaking. The budget generally takes into account both current and future…