Cash Budget Particulars 1 CASH INFLOWS: Collection from debtors From Current sales (2/3 of quarter's sales) 5,000 From Prior sales (1/3 of the last quarter's3,000 sales) Total Cash Inflows during the year 8,000 CASH OUTFLOWS: Production cost 7,000 Selling and Administrative cost 1,000 Purchases of plant and other fixed assets 100 Total Cash Outflow during the year 8,100 Surplus / (Difficiency) (100) Add: Cash (at start) 650 Balance 550 Borrowing made during the year Payment of Loan Ending Cash in hand
Quarters 2
3
4
7,000 2,500 9,500
12,000 3,500 15,500
7,000 6,000 13,000
10,000 2,000 1,100 13,100 (3,600) 550 (3,050) 3,550
8,000 2,900 2,100 13,000 2,500 500 3,000 -
8,500 1,600 2,100 12,200 800 500 1,300
550
500
(2,500) 500
(800) 500
Borrowing = Negative balance + Desired ending cash balance. Payment of loan = Surplus cash - Desired ending cash balance.
1 Minimum required cash balance 2 Cash at start of the year
500 650 Q1
a Cash inflow during the year b Cash outflow during the year Surplus / (Deficiency) c add: Cash (at start) Balance of cash d add: Borrowing during the period e less: Repayment of loan Balance / Required cash (at end)
Q2 8,000 8,100 (100) 650 550 550
9,500 13,100 (3,600) 550 (3,050) 3,550 500
Q3 Q4 15,500 13,000 13,000 12,200 2,500 800 500 500 3,000 1,300 2,500 500
800 500
Borrowing = Negative balance + Required cash
Total 46,000 46,400 (400) 650 250 3,550 3,300 500
Particulars January CASH INFLOWS: Cash Sales (40% of total sales) Collection from debtors (One month after sales)
Month February
March
16,000
18,000
22,000
30,000
24,000
27,000
Total Cash Inflows
46,000
42,000
49,000
CASH OUTFLOWS: Payment for the purchase of merchandise Sales Commission (5% of sales) Fixed cost (excluding depreciation)
14,000 3,500 3,000
33,000 2,000 3,000
36,000 2,250 3,000
TOTAL CASH OUTFLOW
20,500
38,000
41,250
Surplus / (Difficiency)
25,500
4,000
7,750
Cash (at start) Cash (at end)
7,500 33,000
33,000 37,000
37,000 44,750
Working of Purchases:
Cost of goods sold (60% of current sales) Add: Desired ending inventory (60% of sales) Total Less: Opening inventory Purchases
January February March 24,000 27,000 33,000 60,000 69,000 66,000 84,000 96,000 99,000 (51,000) (60,000) (69,000) 33,000 36,000 30,000
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 April purchases Payment of selling and admin exp.
(Rs.100,000 x 98% = 98,000 x 1/2) (Rs. 30,408 x 98% = 29,800 x 1/2) (Rs. 45,000 - Rs. 10,000)
Total Cash Outflow during the year SURPLUS / (DIFFICIENCY) Add: Cash balance (at start) Budget Cash (at end)
Add:
Purchase Budget: Cost of Sales - April Desired ending inventory Less: Expected opening inventory
(Rs. 170,000 x 50%) (Rs. 140,000 x 50% = 70,000 x 2.5 times) Total (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 (Rs. 85,000 x 98%) 175,000 171,500 (Rs. 175,000 x 98%) 260,000 254,800 (229,592) (225,000) 30,408 29,800
Required 1 Cash collection in Feburary Collection from Feb Sales Collection from Jan Sales Collection from Dec Sales Cash collection in Working
(Rs. 54,000 x 55%) (Rs. 65,000 x 30%) (Rs. 87,000 x 13%) Feburary
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 Collection from Dec Sales Collection from Nov Sales CASH INFLOW
(Rs. 65,000 x 55%) (Rs. 87,000 x 30%) (Rs. 90,000 x 13%) (Jan)
CASH OUTFLOW: Cash payment for the purchases of merchandise Cash payment for the expenses of Jan CASH OUTFLOW (Jan)
35,750 26,100 11,700 73,550
10,000 41,000 51,000
Surplus Add: Cash (at start) CASH (at End) - Jan 31 / Feb 01
22,550 5,000 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 Cash payment for the expenses of Jan CASH OUTFLOW (Feb)
12,500 41,000 53,500
Surplus Add: Cash (at start) CASH (at End) - Feb 28
7,010 27,550 34,560
29,700 19,500 11,310 60,510
ec is 55%. an 1 is 45%
s 45% of sales
5% and in Dec 30%
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%) ii) Credit Sales (1,200,000 x 80%) Less: Bad debts Less: Account receivable (at end)
240,000 960,000 (5,000) (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) Add: Purchase during the year
95,000 830,000
Total account payable Less: Account payable (at end) Payment to account payable for purchase of merchandise 19 B
925,000 (98,000) 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%) For 19 B Variable Expenses (120,000 x 50%) Payment of Variable Expenses in 19B:
55,000 60,000 115,000
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 of 19 A
= 110,000
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%) Payment of Fixed Expenses in 19 B
48,000 60,000
Working: Fixed Expenses (Cash payment only) Total amount of fixed expenses Less: Non- Cash Expenses: a) Depreciation 35,000 b) Bad Debt 5,000 Cash Fixed Expenses
100,000
(40,000) 60,000
Total Cash Disbursed during 19 B Variable Expenses Fixed Expenses
115,000 60,000 175,000
84,000
1,117,000 1,201,000
r 19 A was:
Required no.1: Cash Disbursed during the month of June: 1 Payment for purchase of merchandise: For May For June
(11,250 units x Rs. 20 = Rs. 225,000 x 46%) (12,180 units x Rs. 20 = Rs. 243,600 x 54%)
103,500 131,544
2 Payment of Marketing, General and Admin Expenses: For May For June
(51,550 x 46%) (49,300 x 54%)
23,713 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 26,720 less: Expected opening R/M (15,470) Purchases (in May) 11,250
(11,400 x 130%) (Rs. 309,400 / Rs. 20)
2) Calculation of purchases for the month of June:
Material needed in production in June add: Desired ending R/M (130%) less: Expected opening R/M Purchases (in June)
(in units) 11,400 15,600 27,000 (14,820) 12,180
(12,000 x 130%)
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 53,550 Less: Non-cash item Depreciation (2,000)
Operating Expenses = 342,000 x 15 Operating Expenses Less: Non-cash item Depreciation
Operating Expenses (Cash Basis)
Operating Expenses (Cash Basis)
51,550
4) Calculation of payment of wages and salaries: Total payroll in June
38,000
add: Accured payrol (at start) Total Payable less: Accured payrol (at end) Payment of Wages paid in June
3,300 41,300 (3,400) 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%) CASH COLLECTED IN MAY
235,044
50,335 37,900 323,279
342,000
xpenses = 342,000 x 15% 51,300 (2,000) 49,300
31,860
211,266 90,750 333,876
