Cash Budget

Quarters
Particulars 1 2 3 4
CASH INFLOWS:
Collection from debtors
From Current sales (2/3 of quarter's 5,000 7,000 12,000 7,000
From Prior sales (1/3 of the last qua 3,000 2,500 3,500 6,000
Total Cash Inflows during the ye 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 a 100 1,100 2,100 2,100
Total Cash Outflow during the ye 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
Balance / Required cash (at end) 550 500 500 500
Borrowing = Negative balance + Required cash
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)
Purchases 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 (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
Add: 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
(Rs. 54,000 x 55%)
(Rs. 65,000 x 30%)
(Rs. 87,000 x 13%)
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
CASH OUTFLOW (Jan) 51,000
 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
CASH (at End) - Feb 28 34,560
 29,700
19,500
11,310
60,510

c 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%) 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
Add: Purchase during the year 830,000
 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
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 (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:

Total payroll in June 38,000

 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%)

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