Cash Budget

Poll based on Previous Lecture

• The managers at the Pepsi. are involved in preparation of
different financial estimates and in the process of
preparing different budgets.

• In such case, it can inferred that Pepsi Inc. is involved in:

a) Preparing master Budget
b) Making Budgetary Control
c) Involved in Budgetary process
d) All of the above
 Learning Outcomes
• Appraise the different items used in preparation of cash
budget of any business.

• Prepare the ‘cash budget’ for the purpose of forecasting

cash requirements of the business.
 Budget at ‘Burger King’
• An outlet of ‘Burger King’ prepares the
estimate of the following cash
transactions for the months of Apr – June
2021.
a) Raw material purchases $500
b) Cash Sales $4500
c) Purchase of Food processing machine
$350
d) Sale of old coffee vending machine
What Burger King is actually doing?
Cash Sales

Cash Receipts Credit Sales

Sale of Old
Asset
Preparing
Cash Budget Payment for
expenses

Cash Purchase of
Disbursements Materials

Purchase of
Assets
 Components of Cash Budget

Cash Budget

Opening Closing
Balance Cash Balance
Disbursements
Cash Receipts
 Poll – I
• An outlet of ‘Bombay Dyeing’ prepares the estimate of the
following cash transactions for the month of June 2021.
i. Balance of Cash in beginning of month June $100
ii. Estimated cash to be received from the sales of bedsheets
$1100
iii. Estimated payments to labor $200
In such case, the ‘closing balance’ of cash to be recorded in ‘cash
budget’ will be:
a) $1000
b) $1100
c) $1200
d) $1300
 A.) Cash Receipts
• An outlet of ‘Burger King’ prepares the estimate of the following
cash transactions for the months of May – Sept 2021
Particulars May June July August September
Credit Sales 600 700 800 900 1000
Cash Sales 400 600 1000 1200 1600

a) Old machinery sold in month of August $200

b) The money is collected from debtors with lag of 1/2 month.
c) The Opening Cash Balance on June 1st 2020 was 1000$.
Find the total cash receipts for the month of June, July and August
 CASH BUDGET
Particulars June July August
 Poll – II
• An outlet of ‘Raymond Inc.’ provides the sales information (in $)
from Jan – Apr 2021.
• Half of Sales amount is collected in same month and remaining
half in immediate next month.
Jan Feb March April
2000 6000 4000 8000

In such case, the ‘cash collected’ in the month of March 2021, to

be recorded in ‘cash budget’ will be:
a) $5000
b) $6000
c) $4000
d) $8000
 B.) Cash Payments (or disbursements)
• An outlet of ‘Burger King’ prepares the estimate of the following
cash transactions for the months of May – Sept 2021
Particulars May June July August September
Payment of expenses 600 700 800 900 1000

a) It made payment for repairs of its building $100 in month of July

b) Lag in payment of expenses is by 1/8th month.

Find the total cash payments for the month of June, July and
August 2021
 CASH BUDGET
Particulars June July August
 Poll – III
• An outlet of ‘Raymond Inc.’ provides the information (in $) from
Jan – Apr 2021 related to its’ payment of wages.
• Lag in payment of wages is by 1/4th month.

Jan Feb March April

1000 2000 4000 6000

In such case, the ‘wages paid’ in the month of Feb 2021, to be

recorded in ‘cash budget’ will be:
a) $1500
b) $250
c) $750
d) $1750
 C.) Preparation of ‘Cash Budget’
• An outlet of ‘Zara’ prepares the estimate of the following cash transactions for the
months of Jan – April 2021. The balance of cash on 1/2/2021 was $2000

Particulars Sales Purchases Wages

Jan 700 450 600
Feb 800 500 800
March 900 600 1000
April 1000 650 1200

a) Period of credit allowed by suppliers is two months.

b) 25% sales is for cash and credit allowed to customers for credit sales is one month
c) Delay in payment of wages is by one month
Prepare Cash Budget for the month of Feb, March & April 2021
 CASH BUDGET
Particulars Feb March April