Cash Budgeting Exercise

Based on the following information, prepare a Cash Budget for the first and
second quarters of 2020, using the attached template:

• Sales in January are £100,000 and grow 2% in February, 3% in March, etc versus
January sales

• Payment of sales are: 30% cash, 50% on 30 day credit and 20% on 60 days

• Purchases in January are 70% of sales and grow 1% in February, 2% in March, etc
versus January

• Payment of Purchases is 75% cash and 25% on 60 days

• Annual rent of £2,400 is paid quarterly on the first month of each quarter

• The company receives a quarterly interest payment on its investments. The

amount is £700 and the payment is received on the middle month of each quarter

• Salaries are paid monthly – £1,200 per month in the first quarter and 1,500 in the
second

• A semi-annual interest payment of £800 on debt is due in May

• Other supplies paid in cash cost the company £500 monthly

• During the first half the company intends to buy assets worth £12,000 in March
and sell assets worth £8,000 in May. Both transactions will be in cash

• A £5,000 loan is repayable in March

• Assume there are no payments or receipts from the previous year.