Question

RULE 2. Case Budget for a Small Department Store Assumption 12 Cash balance on December 31 i $12,000 Minimum cash balance is $10.000 Sales are 75 credit and 25 cash Credit sales are collected in the following manner * 60% collected in the first month after the sale 30 collected in the second month after the sale 54 collected in the third month after the sale *5% are never collected Sales forecasts are as follows: Pessimise October (actual November (actual) December (actual) January 120.000 February March 14 15 Most likely 5.300.000 350,000 400,000 150.000 200.000 200,000 300.000 315.000 320,000 160,000 160,000 250,000 260,000 265.000 April May June 175.000 250.000 250,000 340,000 360,000 375.000 Rent is $3,000 per month Interest payments of $661 and 5817 are due in April and May, respectively. A tax prepayment of $18,000 is due in March, A capital addition payment of $130,000 is due in February A banknote payment of S7,500 is due in March Insurance premiums are $475 per month Other expense estimates include: mary February Purchases $ 140,000 140,000 210,000 185.000 190.000 180,000 Wapes and Salaries $ 30,000 38.000 40,000 42.000 44,000 44.000 Utilities $ 1450 1,400 1.250 1.250 Advertising $1,600 1.600 1.500 Miscellaneous $ 500 SOO 500 350 2.200 550 36 A .

Answer 1

Particulars Cash Budget for Small Department Store-Most Likely Sales Forecast oct Nov dec jan feb mar apr may jun b cd 300000 350000 400000 150000 200000 200000 300000 315000 320000 225000 262500 300000 112500 150000 150000 225000 236250 240000 75000 87500 100000 37500 50000 50000 75000 78750 80000 B=(A*75%) C=(A*25%) Total Sales Credit Sales @75% Cash Sales@25% 0 E=Bd*60% F=Bc*30% G=Bb*05% Cash Receipts Sales Credit Sales Collection 60% for the first month 30% for the second month 5% for third the month after sales Cash Sales Collection Other Cash Receipts 170625 67500 90000 13125 37500 0 138750 90000 33750 15000 50000 0 140625 90000 45000 5625 50000 0 187500 135000 45000 7500 75000 0 216750 141750 67500 7500 78750 0 226125 144000 70875 11250 80000 75000 0 87500 0 100000 0 Z=C U=(Y+Z+X) Total Cash Receipts 75000 87500 100000 208125 188750 190625 262500 295500 306125 140000 3000 1450 140000 3000 1400 210000 3000 1250 7500 18000 185000 3000 1250 190000 3000 1250 180000 3000 1400 I - - Y Zoo ooo Cash Disbursement Purchases Rent Utilities Bank Notes Tax Repayment Capital Addition Wages & salaries Insurance Advertising Interest Miscellaneous 130000 475 1600 475 1600 475 1500 475 2500 475 2000 664 550 475 2000 817 550 500 500 500 550 T-sum(H:S) Total Cash Disbursement 0 147025 276975 242225 192939 198092 187925 > End of Month Balance (previous Month Closing) =+Cash Receipts --Cash Disbursement Cash at end of the month =+Borrowing --Repayment Final Cash Balance 12000 208125 147025 73100 73100 188750 276975 -15125 25125 10000 190625 242225 -41600 51600 10000 262500 192939 7 9561 54436 295500 198092 151844 100244 306125 187925 218444 > > 25125 54436 51600 100244 12000 73100 10000 10000 218444

Hence

Projected Cash for the following months

Jan 73100

Feb 10000

Mar 10000

April 54436

May 100244

Jun 218444

Particulars Cash Budget for Small Department Store-Most Likely Sales Forecast oct Nov dec jan feb mar apr may jun b c d e h 300000 350000 400000 150000 200000 200000 300000 315000 320000 225000 262500 300000 112500 150000 150000 225000 236250 240000 75000 87500 100000 37500 50000 50000 75000 78750 80000 A B=(A*75%) C=A*25%) Total Sales Credit Sales @75% Cash Sales @25% E=B0*60% F=Bc*30% G=Bb*05% Cash Receipts Sales Credit Sales Collection 60% for the first month 30% for the second month 5% for third the month after sales Cash Sales Collection Other Cash Receipts 170625 67500 90000 13125 37500 0 138750 90000 33750 15000 50000 0 140625 90000 45000 5625 50000 0 187500 135000 45000 7500 75000 0 216750 141750 67500 7500 78750 0 226125 144000 70875 11250 80000 0 75000 87500 100000 0 U=(Y+Z+X) Total Cash Receipts 75000 87500 100000 208125 188750 190625 262500 295500 306125 140000 3000 1450 140000 3000 1400 210000 3000 1250 7500 18000 185000 3000 1250 190000 3000 1250 180000 3000 1400 Cash Disbursement Purchases Rent Utilities Bank Notes Tax Repayment Capital Addition Wages & salaries Insurance Advertising Interest Miscellaneous 130000 475 475 1600 475 1600 475 1500 475 2500 2000 664 550 475 2000 817 550 500 500 500 550 T=sum(H:S) Total Cash Disbursement 147025 276975 242225 192939 198092 187925 End of Month Balance (previous Month Closing) =+Cash Receipts --Cash Disbursement Cash at end of the month =+Borrowing --Repayment Final Cash Balance 12000 208125 147025 73100 73100 188750 276975 -15125 25125 10000 190625 242225 -41600 51600 10000 262500 192939 79561 54436 295500 198092 151844 100244 306125 187925 218444 25125 54436 51600 100244 12000 73100 10000 10000 218444