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's3,000
sales) 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
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

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%) 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