Cash Budget Example PDF

The Cash Budget Chapter 9: Part 3 The Cash Budget The cash budget pulls together much of the data developed in the operating budgets It displays it in four major sections: Receipts Disbursements Cash excess or deficiency, and Financing. Sections of the cash bu...

The Cash Budget Chapter 9: Part 3 The Cash Budget The cash budget pulls together much of the data developed in the operating budgets It displays it in four major sections: Receipts Disbursements Cash excess or deficiency, and Financing. Sections of the cash budget Cash receipts: all cash inflows excluding borrowing Cash disbursements: all payments excluding repayments of principal and interest Cash excess or deficiency; and The financing section: all borrowings, repayments and interest. A cash budget example Royal, Inc. Maintains a 16% open line of credit for $75,000 Maintains a minimum cash balance of $30,000 Borrows on the first day of the month and repays loans on the last day of the month Pays a cash dividend of $49,000 in April Purchases $109,200 of equipment in May and purchases of $25,800 of equipment in June. Both purchases were paid in cash. Has an April 1 cash balance of $62,500. A cash budget example April May June Quarter Beginning cash balance $ 62,500 Add: cash collections 170,000 Total cash available 232,500 Less: cash disbursements Materials Direct labour Schedule of Expected Manufacturing Cash Collections. overhead Selling and administrative Equipment purchase Dividend Total disbursements Excess (deficiency) Financing Borrowing Repayments Interest Total financing A cash budget example April May June Quarter $ Beginning cash balance 62,500 Add: cash collections 170,000 Schedule of Expected Total cash available 232,500 Cash Disbursements. Less: cash disbursements Materials 40,000 Direct Labour Budget Direct labour 37,500 Manufacturing Manufacturing overhead 56,000 Overhead Budget Selling and administrative 70,000 Equipment purchase Selling and Dividend 49,000 Administrative $ Total disbursements 252,500 Budget Excess (deficiency) Financing Borrowing Repayments A cash budget example April May June Quarter Beginning cash balance $ 62,500 Add: cash collections 170,000 Total cash available 232,500 Less: cash disbursements Materials 40,000 Because Royal Direct labour 37,500 wishes to maintain Manufacturing a cash balance of overhead 56,000 $30,000, Selling and the company must administrative 70,000 borrow $50,000 on its Equipment purchase -- line of credit. Dividend 49,000 Total disbursements 252,500 Excess (deficiency) (20,000) Financing Borrowing Repayments Interest Total financing A cash budget example April May June Quarter $ Beginning cash balance $ 62,500 30,000 Add: cash collections 170,000 Total cash available 232,500 Less: cash disbursements Materials 40,000 Direct labour 37,500 Ending cash Manufacturing balance for April overhead 56,000 Selling and is the beginning administrative 70,000 May balance. Equipment purchase -- Dividend 49,000 Total disbursements 252,500 Excess (deficiency) (20,000) Financing Borrowing 50,000 Repayments --- Interest --- A cash budget example April May June Quarter $ Beginning cash balance $ 62,500 30,000 $ 30,000 $ 62,500 Add: cash collections 170,000 400,000 335,000 905,000 Total cash available 232,500 430,000 365,000 967,500 Less: cash disbursements Materials 40,000 72,300 72,700 185,000 Direct labour 37,500 57,500 37,500 132,500 Manufacturing overhead 56,000 76,000 59,000 191,000 Selling and $50,000 × 16% × 3/12 = administrative 70,000 $2,000 85,000 75,000 230,000 Equipment purchase --- 109,200 25,800 135,000 Dividend Borrowings on April 49,000 1 and--- --- 49,000 repayment Total disbursements on June 400,000 252,500 30. 270,000 922,500 Excess (deficiency) (20,000) 30,000 95,000 45,000 Financing Borrowing 50,000 --- --- 50,000 Repayments --- --- (50,000) (50,000) Interest --- --- (2,000) (2,000)