Question

CASE 2 (20 points) Here are some important figures from the budget of Wise Corporation for the third quarter of 2020: September 51.275.00 SLOO Credit alles Credit purchase Cash disbursement Wages, and expenses 158.900 Era . Credit sales collections Collected in mouth of sale Collected month after sale Never collected Je credits S1.135.000 June credit purchases 565102 Being able 55.000 All credit purchases are paid in the following month after the purchase. Instructions: a) Using the above information, complete the following cash budget. (15 points) July August September Beginning cash balance Cash receipts: Cash collections from credit sales Total cash available Cash disbursements: Payments for purchases Wages, taxes, and expenses Interest Equipment purchases Total cash disbursements Ending cash balance b) What are the steps in preparing cash budget? Explain. (5 points)

Answer 1

Answer of Part A is attached below in the image.

Part B cash budget if calculated and estimated of the cash flows (in flows and out flows) of a buisness or a firm for the specific period of time.Cash budgeting help to assess if there is sufficient cash available in the company or in the buisness or not.

Steps of preparing cash budget-

1.We need opening balances for the time period which is selected for the cash budget.

2.Estimating cash in flows for preparing cash budget there is also need of calculating different cash in flows which a firm made by cash sales,providing services,intrest recieved from loans and investments etc.

3.Now we need to predict cash usage in different month of the budget period.A firm spends different amount of cash on different things like buying of raw material,payment of different expenses etc.

4.After knowing cash in flows and cash out flows this are needed to add to obtain if there is inflow or outflow for each month the resulting amount is known as the net cash inflow or outflow which is added to the begining cash balances of the firm which gives us positine of the cash in the firm.

Pauticulaus July | August September oft 3 +25,озо /ч cash bаlаue 4,25, ооо ч,а6,030 ч.2+,835 42 1284705 Inflowes (8) credit sales tash collected from (12+542 1284 105 [12+3,805 (working Note) Cash availab, ZA+B) 15, 52,542 1,17135 [17,01 $ЧО аумажt }оч Рамках 6,8 1,02 2,65 480 440, 160 Not ауы, Таље, ама | 3,4%,6оој 345620 3,34,150 €орема Intrest 29,900 29,400| 244ОО Equimpment 158,900 | 46,300 fowl , од, діодаж- [to,54,52 1344,40o 13,53,50 башня и баlали [4,43,озо 421,835/3, 8, 130 Своийния мон)

calculation medit sales of 입 | July August September credit sales titles Tune August september $11330 20 $12,75,800 $14,83,50010,96,300 Iuflous fuem Wledit sales 604. of pueribus montu 351 mouth Total trylow $6,81,012$7,65,4808,90,100 | $ 3,97,257,311,27542 $1284705 312,73,805 medit sales of 왕 calculation of payment $ 6,81,012 7,65,480 8,90,100 6,57,780 credit Puchase jou pudras 8,90100 16,81,012 765480 au calculation