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Cash Inflows: Cash Surplus/loan Requirement

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A company has to prepare three months cash budget. Their finance dept comes up with the following information.

All sales are made on cash and realized in the same monthe the sales occur. Purchases are paid for in the month they occur.
A monthly salary of 4800 is payable. while Rent for the premises is 2000 per month.
tax liablity is 12000 to be paid in Dec. cash at the start of the month amounted to 400.
a minimum cash requirement of 6000/- has to be maintaned for each month.
You are to pre pare a cash budget for teh last three months.
Dec Jan Feb
Sales 160000 40000 40000
Purchases 140000 40000 40000

SOLUTION

Dec Jan Feb


Sales 160000 40000 60000

Cash inflows
collections 160000 40000 40000

Total collections 160,000 40,000 40,000

CASh out flows


Purchases 140000 40000 40000
salary 4,800 4,800 4,800
Rent 2000 2000 2000
Tax payment 12,000
Total Payments 158800 46800 46800

NCF 1,200 (6,800) (6,800)


CNCF

Cash surplus/Loan Requirement


cash at start 400 1600 -5200
Cumulative cash 1,600 (5,200) (12,000)
Target cash balance -6000 -6000 -6000

Surplus cash or loan needed (4,400) (11,200) (18,000)


ollowing information.
id for in the month they occur.
Corporations, is planning to request a line of credit from her bank. She has estimated the following sales forecasts for the firm:
Sales Labor & Material costs
May(2012) 180000 May 90000
June 180000 June 90000
July 360000 July 126000
August 540000 August 882000
September 720000 September 306000
October 360000 October 234000
Nov 360000 Nov 162000
December 90000 Dec 90000
Jan (2013) 180000

Collection estimates are:

Collection within the month of sales = 10%


Collection the month following the sales = 75%
Collections the second month following sales = 15%

Payments are typically made during the month following the one in which these costs have been incurred.
General and admin salaries will amount to 27,000/-a month, lease payment will be 9,000/- a month,
depreciation charges are 36,000/- per month, miscellaneous expense will be 2,700/- per month.
Income tax of 63,000/- is due in September. A payment of 180,000/- is to be made in October for renovation.
Cash on hand on july 1 amounted to 132,000/- and a minimum cash balance of 90,000/- will be maintained throughout the cash

July Aug sep Oct


Sales 360000 540,000 720,000 360,000

CIF
collections 1st month 36000 54,000 72,000 36,000
2nd 135000 270,000 405,000 540,000
3rd 27000 27,000 54,000 81,000
total 198000 351,000 531,000 657,000

COF
Payments
labor and wages 90000 (126,000) (882,000) (306,000)
alaries -27000 (27,000) (27,000) (27,000)
lease -9000 (9,000) (9,000) (9,000)
Misc -2700 (2,700) (2,700) (2,700)
tax (63,000)
prgress (180,000)

Total 51300 (164,700) (983,700) (524,700)

NCF 249300 186,300 (452,700) 132,300

Cash surplus/loan required


cash at start 132000 381,300 567,600 114,900
cumulative cash 381300 567,600 114,900 247,200
Target -90000 (90,000) (90,000) (90,000)

Surplus cash or loan needed 291300 477,600 24,900 157,200


ollowing sales forecasts for the firm:

been incurred.
a month,
onth.
ber for renovation.
ill be maintained throughout the cash budget period.

Nov Dec Jan


360,000 90,000 180,000

36,000 9,000 18,000


270,000 270,000 67,500
108,000 54,000 54,000
414,000 333,000 139,500
(234,000) (162,000) (90,000)
(27,000) (27,000) (27,000)
(9,000) (9,000) (9,000)
(2,700) (2,700) (2,700)

(272,700) (200,700) (128,700)

141,300 132,300 10,800

247,200 388,500 520,800


388,500 520,800 531,600
(90,000) (90,000) (90,000)

298,500 430,800 441,600

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