QUESTION 1

Helen's Company
Cash Budget for July, August, September, October, November and December
Particulars July August September October November
Cash Receipt:
Sales 425,000 500,000 600,000 625,000 650,000
Cash Sales (12%) 51,000 60,000 72,000 75,000 78,000
Credit Sales:
1 Month after (44%) 127,600 187,000 220,000 264,000 275,000
2 Month after (44%) 132,000 127,600 187,000 220,000 264,000
TOTAL CASH RECEIPT 310,600 374,600 479,000 559,000 617,000

Disbursement:
Purchase (60%) 300,000 360,000 375,000 390,000 420,000
Credit Purchases:
1 Month after (100%) 255,000 300,000 360,000 375,000 390,000
Wages & Salaries (6% before) 17,400 25,500 30,000 36,000 37,500
Monthly Lease Payments (2%) 8,500 10,000 12,000 12,500 13,000
Advertising Expense (3%) 12,750 15,000 18,000 18,750 19,500
R&D Expenditure (12%) - 60,000 72,000 75,000 -
Prepayment of Insurance - - - - -
Miscellaneous Expenditure 15,000 20,000 25,000 30,000 35,000
Taxes - - 40,000 - -
TOTAL DISBURSEMENT 308,650 430,500 557,000 547,250 495,000

Net Cash Flow 1,950 - 55,900 - 78,000 11,750 122,000

(+)Beginning Cash Balance 15,000 16,950 - 38,950 - 116,950 - 105,200
Ending Cash Balance 16,950 - 38,950 - 116,950 - 105,200 16,800
(-)Minimum Cash Balance 15,000 15,000 15,000 15,000 15,000
CASH SURPLUS/DEFICIT 1,950 - 53,950 - 131,950 - 120,200 1,800

c)(i) In the event of a cash deficit, the company may reduce costs to make up for the loss.
A monetary deficit is caused by excessive expenditure. As a result, the company must
cut non-essential costs in order for total receipts to equal total disbursements.

(ii) In the event of a financial excess, the company might use it to fund future expansion plans.
The company may increase its production capacity by
investing more in new buildings, machinery, and goods
mber
December

700,000
84,000

286,000
275,000
645,000

420,000
39,000
14,000
21,000
-
24,000
40,000
45,000
603,000

42,000
16,800
58,800
15,000
43,800

ns.
QUESTION 2

Dayton Bhd
Cash Budget for July, August, September, October, November and December
Particulars July August September October November December
Cash Receipt:
Sales 170,000 160,000 140,000 180,000 200,000 250,000
Cash Sales (20%) 34,000 32,000 28,000 36,000 40,000 50,000
Credit Sales:
1 Month after (40%) 100,000 68,000 64,000 56,000 72,000 80,000
2 Month after (40%) 84,000 100,000 68,000 64,000 56,000 72,000
Other Cash Inflows - - 15,000 27,000 15,000 12,000
TOTAL CASH RECEIPT 218,000 200,000 175,000 183,000 183,000 214,000

Disbursement:
Purchases 140,000 100,000 80,000 110,000 100,000 90,000
Cash Purchases (10%) 14,000 10,000 8,000 11,000 10,000 9,000
Credit Purchases:
Credit 1 Month after (50%) 75,000 70,000 50,000 40,000 55,000 50,000
Credit 2 Month after (40%) 48,000 60,000 56,000 40,000 32,000 44,000
Wages & Salaries (20%) 50,000 34,000 32,000 28,000 36,000 40,000
Rents (12%) 20,400 19,200 16,800 21,600 24,000 30,000
Interest Payment (10%) - - 14,000 - - 25,000
Principal Payment - - - - - 30,000
Cash Dividens - - 20,000 - - 25,000
Taxes - - - - - 80,000
Fixed Asset - 25,000 - - - -
TOTAL DISBURSEMENT 207,400 218,200 196,800 140,600 157,000 333,000

Net Cash Flow 10,600 - 18,200 - 21,800 42,400 26,000 - 119,000

(+) Beginning Cash Balance 22,000 32,600 14,400 - 7,400 35,000 61,000
Ending Cash Balance 32,600 14,400 - 7,400 35,000 61,000 - 58,000
(-) Minimum Cash Balance 15,000 15,000 15,000 15,000 15,000 15,000
CASH SURPLUS/DEFICIT 17,600 - 600 - 22,400 20,000 46,000 - 73,000

(c)(i) In the event of a cash shortage, the company should boost income by expanding sales.
Other incentives, such as a special offer discount, may be available to customers

(ii) In the event of a cash excess, the company can use it to pay down debt.
Loans having high interest rates, for example debt reduction can improve
a company's overall financial status and lower interest payments.