Cash Budget
Quarters
Particulars 1 2 3 4
CASH INFLOWS:
Collection from debtors
From Current sales (2/3 of quarter's sales) 5,000 7,000 12,000 7,000 From Prior sales (1/3 of the last quarter's sales) 3,000 2,500 3,500 6,000 Total Cash Inflows during the year 8,000 9,500 15,500 13,000 CASH OUTFLOWS:
Production cost 7,000 10,000 8,000 8,500
Selling and Administrative cost 1,000 2,000 2,900 1,600 Purchases of plant and other fixed assets 100 1,100 2,100 2,100 Total Cash Outflow during the year 8,100 13,100 13,000 12,200
Surplus / (Difficiency) (100) (3,600) 2,500 800
Add: Cash (at start) 650 550 500 500
Balance 550 (3,050) 3,000 1,300 Borrowing made during the year - 3,550 -
Payment of Loan - - (2,500) (800)
Ending Cash in hand 550 500 500 500
Borrowing = Negative balance + Desired ending cash balance. Payment of loan = Surplus cash - Desired ending cash balance.
1 Minimum required cash balance 500 2 Cash at start of the year 650
Q1 Q2 Q3 Q4
a Cash inflow during the year 8,000 9,500 15,500 13,000 b Cash outflow during the year 8,100 13,100 13,000 12,200
Surplus / (Deficiency) (100) (3,600) 2,500 800
c add: Cash (at start) 650 550 500 500
Balance of cash 550 (3,050) 3,000 1,300 d add: Borrowing during the period - 3,550
e less: Repayment of loan - - 2,500 800
Total 46,000 46,400 (400) 650 250 3,550 3,300 500
Particulars Month
January February March CASH INFLOWS:
Cash Sales (40% of total sales) 16,000 18,000 22,000 Collection from debtors
(One month after sales) 30,000 24,000 27,000
Total Cash Inflows 46,000 42,000 49,000
CASH OUTFLOWS:
Payment for the purchase of merchandise 14,000 33,000 36,000 Sales Commission (5% of sales) 3,500 2,000 2,250 Fixed cost (excluding depreciation) 3,000 3,000 3,000
TOTAL CASH OUTFLOW 20,500 38,000 41,250
Surplus / (Difficiency) 25,500 4,000 7,750
Cash (at start) 7,500 33,000 37,000
Cash (at end) 33,000 37,000 44,750
Working of Purchases:
January February March Cost of goods sold (60% of current sales) 24,000 27,000 33,000 Add: Desired ending inventory (60% of sales) 60,000 69,000 66,000
Total 84,000 96,000 99,000
Less: Opening inventory (51,000) (60,000) (69,000)
CASH INFLOWS
Collection from Sales
a) Cash Sales for April (Rs. 170,000 x 20%) b) Collection from debtors (Credit Sales)
From Feburary Sales (Rs. 120,000 x 80% = Rs. 96,000 x 25%) From March Sales (Rs. 150,000 x 80% = Rs. 120,000 x 30%) From April Sales (Rs. 170,000 x 80% = Rs. 136,000 x 40%) Total Cash Inflow during the year
CASH OUTFLOW
Payment for purchases
March purchases (Rs.100,000 x 98% = 98,000 x 1/2) April purchases (Rs. 30,408 x 98% = 29,800 x 1/2) Payment of selling and admin exp. (Rs. 45,000 - Rs. 10,000)
Total Cash Outflow during the year SURPLUS / (DIFFICIENCY) Add: Cash balance (at start)
Budget Cash (at end) Purchase Budget:
Cost of Sales - April (Rs. 170,000 x 50%)
Add: Desired ending inventory (Rs. 140,000 x 50% = 70,000 x 2.5 times) Total
Less: Expected opening inventory (Rs. 225,000 / 98%) Purchase budget
34,000 24,000 36,000 54,400 148,400 49,000 14,700 35,000 98,700 49,700 30,000 79,700 Gross Net 85,000 83,300 175,000 171,500 (Rs. 175,000 x 98%) 260,000 254,800 (229,592) (225,000) 30,408 29,800 (Rs. 85,000 x 98%)
Required 1
Cash collection in Feburary
Collection from Feb Sales (Rs. 54,000 x 55%) Collection from Jan Sales (Rs. 65,000 x 30%) Collection from Dec Sales (Rs. 87,000 x 13%)
Cash collection in Feburary Working Calculation of Dec Sales:
The amount of Dec sales was collected in the month Dec is 55%. Therefore the remaining % of Dec Sales at Dec 31 or Jan 1 is 45% Balance of A/Rec (Dec) is Rs. 39,150 at Jan 01 which is 45% of sales Sales of December was Rs. 39,150 / 45% 87,000
Required no. 2:
Cash Budget - January CASH INFLOW:
Collection from Jan Sales (Rs. 65,000 x 55%) 35,750 Collection from Dec Sales (Rs. 87,000 x 30%) 26,100 Collection from Nov Sales (Rs. 90,000 x 13%) 11,700
CASH INFLOW (Jan) 73,550
CASH OUTFLOW:
Cash payment for the purchases of merchandise 10,000
Cash payment for the expenses of Jan 41,000
Surplus 22,550
Add: Cash (at start) 5,000
CASH (at End) - Jan 31 / Feb 01 27,550
Working:
Calculation of Nov. Sales:
The amount of Nov sales was collected in the month Nov is 55% and in Dec 30% Therefore the remaining % of Nov. Sales at Dec 31 or Jan 1 is 15%
Balance of A/Rec (Nov.) is Rs. 13,500 at Jan 01 which is 15% of sales Sales of November was Rs. 13,500 / 15% 90,000
Required no. 3:
Cash Budget - Feb CASH INFLOW:
CASH INFLOW (Feb.) 60,510
CASH OUTFLOW:
Cash payment for the purchases of merchandise 12,500
Cash payment for the expenses of Jan 41,000
CASH OUTFLOW (Feb) 53,500
Surplus 7,010
Add: Cash (at start) 27,550
29,700 19,500 11,310 60,510
The amount of Dec sales was collected in the month Dec is 55%. Therefore the remaining % of Dec Sales at Dec 31 or Jan 1 is 45% Balance of A/Rec (Dec) is Rs. 39,150 at Jan 01 which is 45% of sales
Required no:1 Cash Collected in 19 B, resulting from sales of 19 A and 19 B a) Cash collected from 19 A Sales:
Balance of account receivable (at start) b) Cash collected from 19 B sales:
i) Cash Sales (1,200,000 x 20%) 240,000
ii) Credit Sales (1,200,000 x 80%) 960,000
Less: Bad debts (5,000)
Less: Account receivable (at end) (78,000) 877,000 Cash collected from 19 B sales
Total Cash collected in 19 B
Required no.2: Cash disbrusment on 19 B for purchases of merchandise: a) Calculate the amount of purchases in 19 B
Cost of goods sold 840,000
Add: Inventory (at end) 140,000
Total inventory available for sales 980,000
Less: Inventory (at start) (150,000)
Purchase in 19 B 830,000
b) Calculate the amount of payment:
Account payable (at start) 95,000
Total account payable 925,000 Less: Account payable (at end) (98,000) Payment to account payable for
purchase of merchandise 19 B 827,000
Required no.3: Cash disbrusement in 19 B for variable and fixed expenses: 1) Payment of Variable Expenses in 19 B:
For 19 A Variable Expenses (110,000 x 50%) 55,000 For 19 B Variable Expenses (120,000 x 50%) 60,000 Payment of Variable Expenses in 19B: 115,000 Working:
% of Variable expenses to Sales = Variable Expenses / Sales For 19 B = 120,000 / 1,200,000 x 100
Variable Expenses = 10% of sales
Sales of 19 A is Rs. 1,100,000. Therefore Variable expenses for 19 A was: Variable Expenses = 1,100,000 x 10%
Variable Expenses = 110,000 of 19 A
2) Payment of Fixed Expenses in 19 B:
For 19 A Fixed Expenses (60,000 x 20%) 12,000 For 19 B Fixed Expenses (60,000 x 80%) 48,000 Payment of Fixed Expenses in 19 B 60,000 Working: Fixed Expenses (Cash payment only)
Total amount of fixed expenses 100,000 Less: Non- Cash Expenses:
a) Depreciation 35,000
b) Bad Debt 5,000 (40,000)
Cash Fixed Expenses 60,000 Total Cash Disbursed during 19 B
Variable Expenses 115,000
Fixed Expenses 60,000
84,000
1,117,000 1,201,000
Required no.1: Cash Disbursed during the month of June: 1 Payment for purchase of merchandise:
For May (11,250 units x Rs. 20 = Rs. 225,000 x 46%) 103,500 For June (12,180 units x Rs. 20 = Rs. 243,600 x 54%) 131,544
2 Payment of Marketing, General and Admin Expenses:
For May (51,550 x 46%) 23,713
For June (49,300 x 54%) 26,622
3 Payment of Wages and Salaries:
TOTAL CASH DISBURSED IN JUNE
WORKING:
1) Calculation of purchases for the month of May: (in units) Material needed in production in May 11,900
add: Desired ending R/M (130%) 14,820 (11,400 x 130%) 26,720
less: Expected opening R/M (15,470) (Rs. 309,400 / Rs. 20) Purchases (in May) 11,250
2) Calculation of purchases for the month of June: (in units) Material needed in production in June 11,400
add: Desired ending R/M (130%) 15,600 (12,000 x 130%) 27,000
less: Expected opening R/M (14,820) Purchases (in June) 12,180
3) Calculation of Expenses for May and June:
Operating Expenses are 15% of current month sales
Sales in May 357,000 Sales in June
Operating Expenses = 357,000 x 15% Operating Expenses = 342,000 x 15% Operating Expenses 53,550 Operating Expenses
Less: Non-cash item Less: Non-cash item
Depreciation (2,000) Depreciation
Operating Expenses 51,550 Operating Expenses
(Cash Basis) (Cash Basis)
4) Calculation of payment of wages and salaries:
add: Accured payrol (at start) 3,300 Total Payable 41,300 less: Accured payrol (at end) (3,400) Payment of Wages paid in June 37,900
Required no. 2: Cash collection in the month of May:
Cash collected from sales in the month of March (354,000 x 9%) Cash collected from sales in the month of April:
a) Within discount period (363,000 x 60% = 217,800 x 97%) b) At the end of month (363,000 x 25% x 100%)
235,044
50,335 37,900 323,279
342,000 Operating Expenses = 342,000 x 15%
51,300 (2,000) 49,300
31,860
211,266 90,750 333,876
