14 fgfgfgdsdControl Theory

7/30/2019 14 fgfgfgdsdControl Theory

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Budget has been defined by CIMA U. K. as, A financial and

or quantitative statement prepared prior to a defined periodof time, of the policy to be pursued during that period for the

purpose of achieving a given objective.

BUDGETARY CONTROL

Budgetary control is actually a means of control in which the

actual results are compared with the budgeted results so

that appropriate action may be taken with regard to any

deviations between the two.


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Objectives of a Budgetary Control System

1. Definition of Goals: portray with precision, the overall aims of thebusiness and determining targets of performance for each section or

department of the business.

2. Defining Responsibilities: Laying down the responsibilities of each

individual so that everyone knows what is expected from him and how

he will be judged.

3. Basis for Performance Evaluation: Providing basis for the comparison

of actual performance with the predetermined targets and investigationof deviation, if any, of actual performance and expenses from the

budgeted figures. It helps to take timely corrective measures.


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4. Optimum use of Resources: Ensuring the best use of all available

resources to maximize profit or production, subject to the limiting

factors.

5. Coordination: Coordinating the various activities of the business

and centralizing control, but also making a facility for the

Management to decentralize responsibility and delegate authority.

6. Planned action: Engendering a spirit of careful forethought,

assessment of what is possible and an attempt at it. It leads to

dynamism without recklessness. It also helps to draw up long range

plans with a fair measure of accuracy.

7. Basis for policy: Providing a basis for revision of current and

future policies.


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Advantages of Budgetary Control System

1. Maximization of Profit: The budgetary control aims at the

maximization of profits of the enterprise. To achieve this aim, a proper

planning and co-ordination of different functions is undertaken. There is

proper control over various capital and revenue expenditures. The

resources are put to the best possible use.

2. Co-ordination: The working of the different departments and sectors

is properly coordinated with budgets. The budgets of differentdepartments have a bearing on one another. The co-ordination of

various executives and subordinates is necessary for achieving budgeted

targets.

3. Specific Aims: The plans, policies and goals are decided by the topmanagement. All efforts are put together to reach the common goal of

the organization. Every department is given a target to be achieved. The

efforts are directed towards achieving some specific aims. If there is no

definite aim then the efforts will be wasted in pursuing different aims.


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4. Tool for Measuring Performance: By providing targets to

various departments, budgetary control provides a tool for measuring

managerial performance. The budgeted targets are compared to actual

results and deviations are determined. The performance of

each department is reported to the top management.This system enables the introduction of management by exception.

5. Economy: The planning of expenditure will be systematic and there

will be economy in spending. The finances will be put to optimum use.The benefits derived for the concern will ultimately extend to industry

and then to national economy. The national resources will be used

economically and wastage will be eliminated.

6. Determining Weakness: The deviations in budgeted and actual

performance will enable the determination of weak spots. Efforts are

concentrated on those aspects where performance is less than the

stipulated.


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7. Corrective Action: The management will be able to take corrective

measures whenever there is a discrepancy in performance. The

deviations will be regularly reported so that necessary action is taken at

the earliest. In the absence of a budgetary control system the deviation

can determined only at the end of the financial period.8. Consciousness: It creates budget consciousness among the

employees. By fixing targets for the employees, they are made

conscious of their responsibility. Everybody knows what he is expected

to do and he continues with his work uninterrupted.9. Reduces Costs: In the present day competitive world budgetary

control has a significant role to play. Every businessman tries to reduce

the cost of production for increasing sales. He tries to have those

combinations of products where profitability is more.

10. Introduction of Incentive Schemes: Budgetary control system also

enables the introduction of incentive schemes of remuneration. The

comparison of budgeted and actual performance will enable the use of

such schemes.


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Limitations of Budgetary Control System

1. Estimates: Budgets may or may not be true, as they are based on

estimates. The assumptions about future events may or may not

actually happen.

2. Rigidity: Budgets are considered as rigid document. Too much

emphasis on budgets may affect day to day operations and ignores the

dynamic state of organizational functioning.3. False Sense of Security: Mere budgeting cannot lead to profitability.

Budgets cannot be executed automatically. It may create a false sense of

security that everything has been taken care of in the budgets.

4. Lack of coordination: Staff cooperation is usually not available duringBudgetary Control exercise.

5. Time and Cost: The introduction and implementation of the system

may be expensive.


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Process of Budgetary Control

Budgetary control has the following stages:

A. Developing Budgets:

The first stage in budgetary control is developing various budgets. It will

be necessary to identify the budget centers in the organization and

budgets will have to develop for each one of them.

Thus budgets are developed for functions like purchase, sale,

production, manpower planning as well as for cash, capitalexpenditure, machine hours, labor hours and so on. Utmost care

should be taken while developing the budgets. The factors affecting

the planning should be studied carefully and budgets should be

developed after a thorough study of the same.B. Recording Actual Performance:

There should be a proper system of recording the actual performance

achieved. This will facilitate the comparison between the budget and

the actual. An efficient accounting and cost accounting system will help

to record the actual performance effectively.


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C. Comparison of Budgeted and Actual Performance:

One of the most important aspects of budgetary control is the

comparison between the budgeted and the actual performance.The objective of such comparison is to find out the deviation

between the two and provide the base for taking corrective action.

D. Corrective Action:

Taking appropriate corrective action on the basis of the comparisonbetween the budgeted and actual results is the essence of budgeting. A

budget is always prepared for future and hence there may be a variation

between the budgeted results and actual results. There is a need for

investigation of the same and take appropriate action so that the

deviations will not repeat in the future. Responsibilities can be fixed onproper persons so that they can be held responsible for any such

deviations


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TYPES OFBUDGETS

On the basisof TimePeriod

Long termBudget

Short termBudget

On the basisCoverage

FunctionalBudget

MasterBudget

On the basisConditions

Basic BudgetCurrentBudget

On the basisCapacity

FixedBudget

FlexibleBudget


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1. ON THE BASIS OF TIME-PERIOD

1. (I) LONG TERM BUDGETBudgets which are prepared for periods longer than a year are called

Long Term Budgets. Such Budgets are helpful in business forecasting

and forward planning. Examples: Capital Expenditure Budget and

R&D Budget.

1. (II) SHORT TERM BUDGET

Budgets which are prepared for periods less than a year are known as

Short Term Budgets. Such Budgets are prepared in cases where a

specific action has to be immediately taken to bring any variation under

control. Example: Cash Budget.


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2. ON THE BASIS OF COVERAGE

2. (I) FUNCTIONAL BUDGETS

The Functional Budgets are prepared for each function of the

organization. These budgets are normally prepared for a period

of one year and then broken down to each month. The followingbudgets are included in this category.

i. Sales Budget: A Sales budget shows forecast of expected sales in the

future period and expressed in quantity of the product to be sold as well

as the monetary value of the same. A Sales Budget may be prepared

product wise, territories/ area/ country wise, customer group wise,

salesmen wise as well as time like quarter wise, month wise, weekly etc.


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Product

Period

Product A Product B

Units Rate Amount Units Rate Amount

1stquarter

2nd quarter

3rd quarter

4th quarter

Total ------- -------- -------- --------

Sales Budget (In units & Value)

For the Budget Period ending.


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ii. Production Budget: This budget shows the production target to be

achieved in the year or the future period. The production budget is

prepared in quantity as well as in monetary terms. Before preparation ofthis budget it is necessary to study the principal budget or the key

factor. The principal budget factor can be sales demand or the

production capacity or availability of raw material. The policy of the

management regarding the inventory is also taken into consideration.

The production budget is normally prepared for a period of one year

and broken down on monthly basis.

Production targets are decided by adding the budgeted closing

inventory in the sales forecast and subtracting the opening inventory

from the total of the same. Production Cost Budget is prepared bymultiplying the production targets by the budgeted production cost per

unit.


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Product & PeriodParticulars

Product Y Product Z

Q 1 Q 2 Q 3 Q 4 Q 1 Q 2 Q 3 Q 4

A. Budgeted Sales ## ## ## ## ## ## ## ##

B. Add: Budgeted Closing

Stock of Finished goods

## ## ## ## ## ## ## ##

C. Less: Budgeted opening

stock of Finished goods

## ## ## ## ## ## ## ##

D. Budgeted Production

(A+B-C)

## ## ## ## ## ## ## ##

Production Budget (in Units)


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iii. Material Purchase Budget: This budget of materials to be purchased

during the coming year. For the preparation of this budget, production

budget is the starting point if it is the key factor. If the raw materialavailability is the key factor, it becomes the starting point. The desired

closing inventory of the raw materials is added to the requirement as

per the production budget and the opening inventory is subtracted

from the gross requirements. This budget is prepared in quantity as wellas the monetary terms and helps immensely in planning of the purchase

of raw materials. Availability of storage space, financial resources,

various levels of materials like maximum, minimum, re-order and

economic order quantity are taken into consideration while preparing

this budget. A separate material utilization budget may also be prepared

as a preparation of material purchase budget.

/


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Particulars Material X Material YA. Budgeted Usage (for production)

Product A

Product B

*******

*******

*******

*******

Total ******* *******

B. Add: Closing Stock of material ******* *******

C. Less: Opening stock of material ******* *******

D. Budgeted Purchases in units(A+B-C)

******* *******

E. Rate per unit ******* *******

F. Budgeted Purchase In Value (D*E) ******* *******

Material Purchase / Procurement Budget

For the budgeted period.


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(iv) Cash Budget: a cash budget is an estimate of cash receipts and cash

payments prepared for each month. In this budget all expected

payments, revenue as well as capital and all receipts, revenue and

capital are taken into consideration.The main purpose of cash budget is to predict the receipts and

payments in cash so that the firm will be able to find out the cash

balance at the end of the budget period. This will help the firm to know

whether there will be surplus or deficit at the end of budget period. Itwill help them to plan for either investing the surplus or raise necessary

amount to finance deficit. Cash budget is prepared in various ways, but

the most popular form of the same is by method of Receipt and

Payment method.

P ti l M th 1 M th 2 M th 3 M th 4


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Particulars Month 1 Month 2 Month 3 Month 4

Opening cash balance b/f ##

Cash receipts

Receipts from debtors

Sales of capital items

Loans received

Proceeds from share issues

Any other cash receipts

Deficit c/f ** (If balance is negative)

Cash payments

Deficit b/d ##

Payments to creditors

Wages and salaries

Loan repayments

Capital expenditure

Taxation

Dividends

Receipts less payments

Closing cash balance c/f** (If balance is positive)


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2. (II) MASTER BUDGET

All the budgets described previously are called as FunctionalBudgetsthat are prepared for the planning of individual function of the

organization. For example, Budgets are prepared for Purchase, Sales,

Production, Manpower Planning, and so on.

A master budget which is also called as Compressive Budget is a

consolidation of all the functional budgets. It shows the projected

Profit and Loss account and Balance sheet of business organization.

For preparation of this budget, all functional budget are combined

together and the relevant figures are incorporated in preparation of

the projected Profit and Loss Account and Balance Sheet. ThusMaster Budget is prepared for the organization and not for individual

functions.


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3. ON THE BASIS OF CONDITIONS

3. (I) BASIC BUDGETS: Budget, which remains unaltered over a longperiod of time, is called Basic Budget.

3. (II) CURRENT BUDGETS: A Budget, which is established for use over a

short period of time and is related to the current conditions, is calledCurrent Budget. It cover a very short period, say a month or a quarter.

They are essentially short term budgets adjusted to current conditions.

4 ON THE BASIS OF CAPACITY


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4. ON THE BASIS OF CAPACITY

4. (I) FIXED BUDGET: When a budget is prepared by assuming a fixed

percentage of capacity utilization, it is called as a fixed budget.

For example, a firm may decide to operate at 90% of its total capacityand prepare a budget showing the projected profit or loss at that

capacity. This budget is defined by The Institute of Cost and

Management Accountants of [U.K.] as the budget which is designed to

remain unchanged irrespective of the level of activity actually attained.It is based on a single level of activity.

4. (II) FLEXIBLE BUDGETS: a Flexible budget is a budget that is prepared

for different levels of capacity utilization. It can be called as a series of

fixed budgets prepared for different levels of activity. For example, a

budget can be prepared for capacity utilization levels of 50%, 60%, 70%,

80%, 90% and 100%.


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ZERO BASE BUDGET

Zero base Budgeting ( ZBB ) examines a programme or function or

responsibility from scratch. Nothing is allowed simply because it was

being done in the past. The manager proposing the activity has,therefore, to prove that the activity is essential and the various amounts

being asked for, are reasonable taking into account the volume of the

activity.

Zero Base Budgeting is method of budgeting whereby all activities are

revaluated each time budget is formulated and every item of

expenditure in the budget is fully justified. Thus the Zero Base Budgeting

involves from scratch or zero.


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Zero Base Budgeting actually emerged in the late 1960s as an

attempt to overcome the limitations of incremental budgeting. This

approach requires that all activities are justified and prioritized

before decisions are taken relating to the amount of resources

allocated to each activity. In incremental budgeting or traditional

budgeting, previous years figures are taken as base and based on

the same the budgeted figures for the next year are worked out.Thus the previous year is taken as the base for preparation of the

budget. Whereas in Zero Base Budgeting, the beginning is made

from scratch and each activity and function is reviewed thoroughly

before sanctioning the same and all expenditures are analyzed andsanctioned only if they are justified.


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Process of Zero Base Budgeting

Determination of objectives of Budgeting : The objective may be toeffect cost reduction in staff overheads or analyze and drop the

projects which do not fit in the organizational structure etc.

Determination of the extent to which ZBB is to be introduced:

Whether it is to be introduced in all areas of activities or only in a

few selected areas on a trial basis.

Development of decision units : Decision units refer to units

regarding which a cost benefit analysis will be done to decidewhether they should be allowed to continue or not. It may be a

functional department, a programme, a product line or a sub-line.


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Development of decision packages: After identification of decision

units, the manager of each decision unit reviews the activities of

his unit and examines alternative ways of accomplishing theobjectives. He does a cost benefit analysis and selects the best

alternative. He then prepares a decision packages which effectively

summarize his plans and the resources required to achieve them.

Review and ranking of decision packages: The management ranks

the decision packages in order of increasing benefit or importance

to the organization.

Preparation of Budgets: After the choice of decision package to beimplemented is made, resources are allocated to different decision

units and budgets relating to each unit are prepared.

BENEFITS FROM ZBB


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BENEFITS FROM ZBB

Benefits from ZBB can be summarized as follows:

i. ZBB facilitates review of various activities right from the scratch and a

detailed cost benefit study is conducted for each activity. Thus an

activity is continued only if the cost benefit study is favorable. Thisensures that an activity will not be continued merely because it was

conducted in the previous year.

ii. A detailed cost benefit analysis result in efficient allocation of

resources and consequently wastages and obsolescence is eliminated.iii. A lot of brainstorming is required for evaluating cost and benefits

arising from an activity and this results into generation of new ideas and

also a sense of involvement of the staff.

iv. ZBB facilitates improvement in communication and coordination

amongst the staff.

v. Awareness amongst the managers about the input costs is created

which helps the organization to become cost conscious.

vi. An exhaustive documentation is necessary for the implementation of

this system and it automatically leads to record building.


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LIMITATIONS OF ZERO BASE BUDGETING

The following are the limitations of Zero Base Budgeting:i. It is very detailed procedure and naturally is time consuming and lot of

paper work is involved in the same.

ii. Cost involved in preparation and implementation of this system is

very high.iii. Morale of staff may be very low as they might feel threatened if a

particular activity is discontinued.

iv. Ranking of activities and decision-making may become subjective at

times.

v. It may not advisable to apply this method when there are nonfinancial considerations, such as ethical and social responsibility because

this dictate rejecting a budget claim on low ranking projects.


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Performance Budgeting

Performance budgeting is a relatively new concept which focuses on

functions, programmes and activities. Performance budgets areestablished in such a manner that each item of expenditure related to a

specific responsibility centre is closely linked with the performance of

that centre.

Performance budgeting involves evaluation of the performance of the

organization in the context of both specific as well as overall

objectives of the organization.

According to the National Institute of Bank Management, performance

budgeting technique is, the process ofanalyzing, identifying,

simplifying and crystallizing specific performance objectives of a job tobe achieved over a period in the framework of the organizational

objectives, the purpose and objectives of the job. The technique is

characterized by its specific direction towards the business objectives of

the organization.


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Thus, performance budgeting lays immediate stress on the achievement

of specific goals over a period of time. However, in the long-run it aims

at continuous growth of the organization so that it continues to meet

the dynamic needs of its growing clientele. It enables the organizationto be sensitive and adaptive, preventing it from developing rigidities

which may slow down the process of growth.

The main features of performance budgeting are as follows:i. Classification into functions, programs or activities

ii. Specification of objectives for each program

iii. Establishing suitable methods for measurement of work as far as

possible

iv. Fixation of work targets for each program.

CASH BUDGET


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1. From the following information prepare a monthly Cash- Budget for the four months ending

31st December 2011.

Expected Sales:

September 50,000

October 60,000

November 45,000

December 80,000

Expected Purchase:

September 32,000

October 60,000

November 70,000

December 45,000

Other relevant information is:

Wages to be paid to workers Rs. 6,000 each month.

Dividend from investment amounting to Rs. 1,000 is expected on 31st December 11.

Income tax to be paid in advance in December Rs. 2,000.

Preference share dividend of Rs. 5,000 is to be paid on 30th November.

Balance at Bank on 1st September is expected to Rs. 6,000.

2 From the following particulars make out a Cash-Budget of Luxury Ltd for October to Decembe


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2. From the following particulars make out a Cash-Budget of Luxury Ltd. for October to Decembe

Month Sales Purchase Wages

Actual Figures

July 3,00,000 1,00,000 60,000

August 3,50,000 1,50,000 70,000

September 4,00,000 2,00,000 64,000

Budgeted

October 6,00,000 3,00,000 80,000

November 4,50,000 2,50,000 72,000December 5,00,000 2,00,000 60,000

Other information:

Credit allowed to customer is 2 months and credit allowed by creditor is 1 month.

Time lag in payment of wages and expenses is of a month.

Advance tax is to be paid in November Rs. 25,000.Insurance Rs. 5,000 payable every month which is not included in the above wages and

expenses.

Machinery purchased in December amounted to Rs. 1,50,000.

10% of sales and purchase are made for cash.

Selling commission is payable @ 5% on sales, payable in the month following the month of

collection.The bank balance on 1st October is 1,00,000.

3 Prepare a Cash-Budget for the three months ending 30th June 2011 from the


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3. Prepare a Cash Budget for the three months ending 30 June, 2011 from the

information given below:

(a) Month Sales Materials Wages Overheads

February 14,000 9,600 3,000 1,700

March 15,000 9,000 3,000 1,900April 16,000 9,200 3,200 2,000

May 17,000 10,000 3,600 2,200

June 18,000 10,400 4,000 2,300

(b) Credit terms are:

Sales & Debtors- 10% sales are on cash, 50% of the credit sales are collected next

month and the balance in the following month.

Creditors- Materials 2 months

Wages months

Overhead month

( c) Cash and bank balance on 1st April 2011 is expected to be Rs. 6,000.(d) Other relevant informations are:

Plant & machinery will be installed in February 2011 at a cost of Rs. 96,000. The

monthly installment of Rs. 2,000 is payable from April onwards.

Dividend @ 5% on preference share capital of Rs. 2,00,000 will be paid on 1st June.

Dividend from investment amounting to Rs. 1,000 is expected to be received in June.Advance income tax to be paid in June is Rs. 2,000.

4 From the following information supplied by Bright Ltd Prepare a cash budget for the


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4. From the following information supplied by Bright Ltd. Prepare a cash budget for the

Period From 1st September 2011 to 31st December 2011:

MonthsCredit

Purchase

Credit

Sales WagesSelling

Expenses Overheads

July 85,000 1,60,000 32,000 8,000 10,000

August 92,000 1,85,000 37,000 9,500 11,500

September 1,00,000 2,10,000 42,000 10,500 13,000

October 1,20,000 2,45,000 49,000 12,500 14,500November 90,000 1,82,000 36,000 9,000 11,000

Additional Information:

Expected cash balance on 1st September is Rs. 10,500.

Period of credit allowed to debtors is 2 months.

Period of credit allowed by creditors is 1 month. Time lag in payment of wages, selling expenses and overhead is 1 month.

Selling commission @ 2% on sales is payable 1 month after sales.

Expenditure on machinery worth Rs. 50,000 is payable in October.

Expected cash sales per month Rs. 15,000. No commission is payable on cash sales.

5. Following information is available from the record of Jay Ltd. for the year end 31st Dec 2011.


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g y y

Rs. (Lakhs)

Fixed Expenses

Wages & Salaries 9.5

Rent, Rates and Taxes 6.6

Depreciation 7.4

Sundry expenses 6.5

Semi-Variable expenses (50% capacity)

Maintenance & Repairs 3.5

Indirect Labour 7.9

Sales department salaries 3.8

Sundry expenses 2.8

Variable Expenses (50% capacity)Material 21.7

Labour 20.4

other Expenses 7.9

Total 98.0Assuming that fixed expenses remain constant for all levels of production, Semi variable expenses remain

constant between 45% and 65% of capacity, increasing by 10% if capacity exceeds 65%but does not exceed

85% of capacity and by 20% if capacity exceeds 85%.Sales at various levels are:50% capacity 100 Lakhs

60% capacity 120 Lakhs




Prepare a flexible budget for the year and forecast the profit at 60%, 75%, 90%, 100% of capacity.


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6. Prepare flexible budget for the production at 80% and 100%activity on the basis of the following information:

Production at 50% capacity:- 5,000 units of raw material @

Rs. 80 per units, Direct Labour @ Rs. 50 per unit, Direct

expenses Rs. 15 per unit, Factory expenses Rs. 50,000 (50%variable), Administrative expenses Rs. 60,000 (40% fixed).

MATERIAL PURCHASE / PROCUREMENT BUDGET


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MATERIAL PURCHASE / PROCUREMENT BUDGET

7. The Sales Manager of Delhi Mills Company expected to sale 25,000 units of a

particular product next year. The Production Manager consulted the storekeeper who

gave the necessary detail as follows:

Two kinds of raw material, P and Q required for manufacturing the product. Each unit

of the product requires 2 unit of P and 3 unit of Q. The estimated opening balances atthe commencement of the next year are:

Units

Finished Product

5,000

Raw Material P 6,000

Raw Material Q 7,500The desirable closing balances at the end of the next year are:

Units

Finished Product 7,000

Raw Material P 6,500

Raw Material Q 8,000

Let us prepare a statement showing material purchase budget for the next year.

8 The sales and production budgets for a glass manufacturing company


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8. The sales and production budgets for a glass manufacturing company

are given below. It is now the end of January, during which actual sales

were 44,000 units. The sales manager expects the sales for each of the

remaining months of the year to be 25% higher than originally budgeted.

He wishes to increases production to take advantage of the higherdemand. The firm has a policy of keeping inventory equal to budgeted

sales for the following two months. Actual production in January was

56,000 units and the beginning inventory was 88,000 units. The budgeted

data based on previous estimates is given below:

Particulars January February March April May June

Budgeted Sales 40,000 48,000 56,000 60,000 56,000 52,000

Budgeted Production 56,000 60,000 56,000 52,000 48,000 nil

Prepare modified sales budgets and production budget.

9. A glass manufacturing company requires you to calculate and present the budgeted


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g g p y q y p g

Income-Statement for the year from the following information:

Sales

Toughened glass Rs. 3,00,000

Bent toughened glass Rs. 5,00,000

Direct material cost 60% of sales

Direct Wages 20 workers @ 150/month

Factory Overheads

Work manager salary Rs. 500/monthForeman Rs. 400/month

Stores & spares 2.5% on sales

Depreciation on machinery Rs.12,600

Light and Power Rs. 5,000Repairs & Maintenance Rs. 8,000

Other sundries 10% 0n direct wages

Administration, selling & distribution expenses 14,000 per year

10. Z Ltd. provides you the following information:

Balance-sheet (31-3-2011)


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Balance sheet (31 3 2011)

Liabilities Amount Assets Amount

Share Capital 4,00,000 Plant & Machinery

Retained Earnings 32,000 Original Cost 4,00,000

Creditors 10,000 Less: Depreciation 1,00,000 3,00,000

Bills payable 6,000 Stock of Raw Material 38,000

Provision for taxation 20,000 Stock of Finished goods 80,000

Debtors 20,000

Bills Receivable 10,000

Cash 20,000

4,68,000 4,68,000

1 Purchase of machinery during 2011-12 40,000

2 Outstanding Debtors 46,000

3 Outstanding Creditors 11,000

4 Credit Sales 4,40,000

5 Credit Purchase 1,40,000

6 Closing stock of raw material 52,000

7 Closing stock of finished goods 66,900

8 Direct labour consumed and paid 70,000

9 Factory overheads (Including depreciation for Rs 20,000) 95,000

10 Administrative, Selling & distribution overheads 60,300

11 Income tax is levied @ 50% and paid in the following year

12 Re bills receivable:

(i) To be drawn 4,000(ii) To be endorsed to trade creditors 1,000

(iii) To be collected 10,000

13 Re bills payables

(i) To be accepted 5,000

(ii) To be discharged 7,000

14 Budgeted profit fo 2011-12 75,600

15 Income tax to be provided @ 50%

R i d P C h B d t d B d t d B l Sh t

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14 fgfgfgdsdControl Theory