A budget is an estimate of costs, revenues, and resources over a specified budget.

period, Total 222,000 244,000 266,000 288,000

reflecting a reading of future financial conditions and goals. Less: Beginning Inventories 20,000 22,000 24,000 26,000
Required Production 202,000 222,000 242,000 262,000
SALES BUDGET
Sales Revenue = Units to be sold x Unit Selling Price Note: The beginning inventory of the next quarter is the ending inventory of the last quarter.
Example: The required production of ABC Corporation in the first quarter is 200,000 units. The
units increased by 10% per quarter. The selling price per unit is Php 5.00.
CASH BUDGET
ABC Corporation Excess Cash Balance = Net Cash Flow + Ending Cash Balance - Minimum Cash Balance
Sales Budget Net Cash Flow = cash receipts - cash disbursements
For the Year Ending December 31, 2020 - Cash Receipts = Quarter of sale +Quarter after sale
QUARTER Ending Cash Balance = Net Cash Flow + Beginning Cash
1 2 3 4
Units to be sold 200,000 220,000 240,000 260,000
Unit Selling Price x 5 5 5 5
Sales Revenue 1,000,000 1,100,000 1,200,000 1,300,000

PRODUCTION BUDGET
Required Production in Units = Expected Sales + Target Ending Inventories- Beginning
Inventories
Example: Determine the units to be produced by ABC Corporation in 2020.

Quarter 1 Quarter 2 Quarter 3 Quarter 4 Cash Receipts = Quarter of Sale +Quarter after sale
Quarter of Sales = projected sales per quarter x percentage of sales collection
Projected Units 200,000 220,000 240,000 260,000
Q1 Q2 Q3 Q4
Target Level Ending Inventories 22,000 24,000 26,000 28,000 Php 1,010,000 1,110,00 1,210,000 1,310,000
x85% x85% x85% x85%
Php 858,000 943,000 1,028,000 1,113,500
Quarter after sales = projected sales per quarter x remaining percentage of sales collection
Q1 Q2 Q3 Q4
Php 900,000 1,110,000 1,210,000 1,310,000
x15% x15% x15% x15%
135,000 151,500 166,500 181,500
Cash Receipts Php 993,500 1,095,000 1,195,000 1,295,000
The beginning inventory is 20,000 units
ABC Corporation Cash Disbursements = Identify all the payments to be made and add all expenses.
Sales Budget
For the Year Ending December 31, 2020
QUARTER
1 2 3 4
Projected Sales 200,000 220,000 240,000 260,000
Add: Target Level Ending Inventories 22,000 24,000 26,000 28,000
 Receivables
Cost of Sales = projected sales per quarter x % of sales = (Receivable in 2019 / Net sales in 2019) x Net Sales in 2020
= (2,800,500 / 54,705,675) x 60,176,243
Note: If the minimum cash balance is less than the ending cash balance, the firm has excess cash. = Php 3,080,000
If the minimum cash balance is greater than the ending cash balance, the firm requires financing

PROJECTED STATEMENT OF INCOME STATEMENT

Projected Net Sales Inventories
= Net Sales in 2019 x (1 + Expected increase in sales percentage) = (Inventories in 2019 / Net sales in 2019) x Net Sales in 2020
= Php 54,705,675 x 1.10 = (5,140,213 / 54,705,675) x 60,176,243
= Php 60,176,243 = Php 5,654,000
Projected Cost of sales Other Current Assets
= (Cost of Sales in 2019 / Net Sales in 2019) x Net Sales in 2020 = (Other current Assets/ Net Sales in 2019) x Net Sales in 2020
= (41,954,730 / 54,705,675) x 60,176,243 = (1,500,000/54,705,675)x 60,176,243
= Php 46,150,203 = Php 1,650,000
Operating Expense Property Plant and Equipment
= (PPE in 019 + new PPE acquisition in 2020) - [(gross balance in 2020 + new PPE acquisition in
Varible (n% x NS 2020) = 8% x 60,176,243
= Php 4,814, 099 2020) x Depreciation Expense]
= (12,400,000 + 6,000,000) - (30,000,000 + 6,000,0000) x .10
Add Fixed (Depreciation Expense) = (30,000,000 + 6,000,000) x .10 = 18,400,000 - 3,6000,000
= Php 3,600,000 = Php 14,800,000
Trades Payable
Total Operating Expense Php 8,414, 099 = (Trades in 2019 / Net Sales in 2019) x Net Sales in 2020
Interest Expense = (5,550,000 / 54,705,675) x 60,176,243
= Php 6,105,000
First Loan Php 1,250,000 10% (6/12) Php 31,250
Income Taxes Payable
Second Loan 3,000,000 10% (6/12) Php 75,000 = Income before taxes x % of the income tax payable that will be paid in 2020
= 5,443,191 x .75
New Loan 2,500,000 10% (6/12) Php 62,500 = 4,082,993
Retained Earnings
Total Interest Expense: Php 168, 750 = Retained Earnings in 2019 + Net Income in 2020) - Cash Dividends
Taxes = (5,043,216 + 3,810,234) - 2,000,000
= Income before taxes x Income tax rate = Php 6,853,450
= 5,443,191 x .30 EFN (External Fund Needed)
= Php 1,632,957 = Change in Total Assets - (Change in total liabilities + Change in Stockholders Equity)
= 4,444,021 - (5,258,786 + 2,531,944)
PROJECTED STATEMENT OF FINANCIAL POSITION = 4,444,021 - 7,790,730
Cash = Php - 3,345,709
= (Cash in 2019 / Net sales in 2019) x Net Sales in 2020 Note: if EFN is (+) it means that the company needs more funds, if EFN i (-) it means that the
= (2,000,000 / 54,705,675) x 60,176,243 company has excess cash.
= Php 2,200,000
PROJECTED STATEMENT OF CASH FLOW
Changes in Accounts = Accounts in 2019 - Accounts in 2020