03 Projected – Monthly, Weekly or Daily 04 Strategy: - Borrow when cash is deficit / - Invest when cash is surplus STEP TO CONSTRUCT CASH BUDGET STEP 4
STEP 3 -Prepare Cash
Reconciliation - Determine whether STEP 2 -Determine the Net that month is either Cash Flow (NCF) deficit or surplus. STEP 1 - Determine the amount - NCF = TCI – TCO of purchases and - NCF = a – b - Determine time frame payment within the right to construct the cash time frame budget - Determine total - Determine amount amount of cash of sales include cash outflow and credit within the right time frame - Determine total amount of cash inflow IMPORTANT
- Bad Debt - SALES & PURCHASES
- Uncollected Debt need to be place at the right - Depreciation month - Ending Balance last month become Beginning Balance ALL NOT INVOLVE IN for next month. CASH BUDGET EXAMPLE Month Sales Prepare Sweethermanaaas Bake & Co. cash budget for first quarter 2019. ⮚Cash Sales are 50% of Total Sales, Balance 60% collects One Month after Oct 18 2000 sales and 40% collects Two Month after Sales Nov 18 2500 ⮚ Material Purchase are made One Month Before Sales (40%), 50% in Cash, and balance will be paid equally in next Two Months Dec 18 3200 ⮚ Fixed Expenses; Depreciation RM 300, Rent-RM400, Selling & Admin- RM200, Interest on L/term debt-RM 100 Jan 19 2000 ⮚ Buy new machine at RM2300, pay 20% in January, and balance pay in Feb Feb 19 3000 ⮚ Cash Balance in Dec is RM 500, and Minimum Cash Balance is set at RM500 ⮚ Any Short-term borrowing cost 10% Mar 19 2500 April 19 3500 SALES = Cash Sale + Credit Sale 1. Total all the % of collection of sales. 2. If > 100% - should separate between cash and credit (cash is cash), balance of credit should be 100% 3. If < 100% - direct collection from sales. STEP 1 Sweethermanaaas Bake & Co. Cash Budget For the First Quarter 2019. 1 Time frame
Dec Jan Feb Mar April
(a) Inflows: 2 Amount 3 Sales 3200 2000 3000 2500 3500 of sales Cash Sales (50%) 1600 1000 1500 1250 1750 Credit Sales (50%) 4 1600 1000 1500 1250 1750 1 month after sale (60%) 960 600 900 750 2 month after sales (40%) 5 500 640 400 600 6 Total Cash Inflows 2460 2740 2550 STEP 2 Sweethermanaaas Bake & Co. Cash Budget For the First Quarter 2019.
Dec Jan Feb Mar April
Sales 3200 2000 3000 2500 3500
(b) Outflows:
Purchases (40%) month before sales
1 800 1200 1000 1400
Cash Payment (50%) 2 400 600 500 700
Credit Payment (50%) 400 600 500 700
1 month after purchases (50%) 320 200 300 250
2 month after purchases (50%) 320 200 300
Rent 3 400 400 400
Selling & Admin 200 200 200
Interest on LTD 4 100 100 100
New machine 460 1840
STEP 3 & 4 Sweethermanaaas Bake & Co. Cash Budget For the First Quarter 2019.
July = RM1,170,000 Jul = RM267,000 Jan = RM93,000 Q1 PART B Aug = RM4,000,000 Aug = RM438,000 Feb = RM220,800 Q4 Sept = RM6,280,000 Sept = RM740,000 Mar = RM297,800
Public Money & Management Volume 23 Issue 1 2003 (Doi 10.1111/1467-9302.00339) Hepworth, Noel - Preconditions For Successful Implementation of Accrual Accounting in Central Government PDF