Question
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Using a spreadsheet, prepare a cash budget for New Tech for the next year (January through...
Using a spreadsheet, prepare a cash budget for New Tech for the next year (January through December) based on the following information.
OCT NOV DEC Sales revenue (previous year) 325.0 325.0 325.0
Purchases 59.2 (December)
PAYMENT SCHEDULE
Cash sales 10%
30-day payment = 70%
60-day payment = 20%
PURCHASE SCHEDULE
Paid in first month = 40%
Paid during second 60 days = 60%
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Sales Revenue 325 300 275 325 350 375 400 375 350 300 275 250
Purchases 59.0 59.2 59.2 59.2 59.2 59.2 59.2 59.2 59.2 59.2 59.2 59.2
Disbursements
Freight in 4.2 4.0 5.1 5.4 7.3 6.5 6.7 6.6 6.1 7.0 5.8 5.7
Labor 40.0 39.0 38.0 42.0 38.4 44.3 42.5 41.0 38.0 39.0 39.5 38.0
Utilities, 2.5 2.2 2.4 2.5 2.5 2.8 2.7 2.5 2.6 2.6 2.6 2.4 Insurance, etc.
Salaries – selling 60.0 62.0 65.8 62.8 62.7 67.9 71.6 62.8 64.9 66.9 68.0 65.0
Commissions 5.9 5.0 5.8 6.8 6.9 7.4 8.0 7.8 6.5 6.8 6.4 6.4
Travel 7.0 7.1 6.9 6.8 7.6 7.8 8.4 7.5 7.7 7.7 7.9 7.4
Advertising 6.0 6.5 7.0 9.0 8.5 8.7 8.3 8.1 7.0 7.2 6.0 7.5
Other charges 5.0 6.0 3.0 40.0 50.0 21.5 18.3 18.7 18.9 16.0 8.5 14.0
Selling Salaries 35.0 35.0 34.0 33.0 36.0 36.0 38.0 39.0 35.0 33.0 32.0 34.0 administration
Leasing 5.8 5.8 5.8 5.8 5.8 5.8 5.8 5.8 5.8 5.8 5.8 5.8
Research 8.3 10.3 15.6 7.5 8.3 7.7 7.9 6.2 6.7 6.9 6.3 8.3
Taxes 9.3 9.3 9.3 9.3 9.3 9.3 9.3 9.3 9.3 9.3 9.3 9.3
Purchase of assets 40.0 45.0 33.0 350.0 500 16.8 23.8 23.0 18.0 20.0 20.0 10.0
Solutions
Expert Solution
Summarising Sales and purchase breakdown;
| SALES | |
| Cash sales | 10% |
| 30-day payment | 70% |
| 60-day payment | 20% |
| Purchases | |
| 30-day payment | 40% |
| 60-day payment | 60% |
Calculation of Previous Year's Cash Flows
| OCT | NOV | DEC | |
| Sales | 325.00 | 325.00 | 325.00 |
| Purchases | 59.20 | ||
|
Collection From Sales |
|||
| Cash sales 10% Current Month | 32.50 | 32.50 | 32.50 |
|
30-day payment (70%* previous month) |
227.50 | 227.50 | |
|
60-day payment (20%* 2 month before) |
65.00 | ||
| Cash Flows for the month | 32.50 | 260.00 | 325.00 |
|
Balance from previous month |
32.50 | 292.50 | |
| Balance C/f to Next month | 32.50 | 292.50 | 617.50 |
Current Year's Cash Budget
| Particulars | JAN | FEB | MAR | APR | MAY | JUN | JUL | AUG | SEP | OCT | NOV | DEC |
| Sales | 325.00 | 300.00 | 275.00 | 325.00 | 350.00 | 375.00 | 400.00 | 375.00 | 350.00 | 300.00 | 275.00 | 250.00 |
| Purchases | 59.20 | 59.20 | 59.20 | 59.20 | 59.20 | 59.20 | 59.20 | 59.20 | 59.20 | 59.20 | 59.20 | 59.20 |
| Collection From Sales | ||||||||||||
| Cash sales 10% Current Month | 32.50 | 30.00 | 27.50 | 32.50 | 35.00 | 37.50 | 40.00 | 37.50 | 35.00 | 30.00 | 27.50 | 25.00 |
| 30-day payment (70%* previous month) | 227.50 | 227.50 | 210.00 | 192.50 | 227.50 | 245.00 | 262.50 | 280.00 | 262.50 | 245.00 | 210.00 | 192.50 |
| 60-day payment (20%* 2 month before) | 65.00 | 65.00 | 65.00 | 60.00 | 55.00 | 65.00 | 70.00 | 75.00 | 80.00 | 75.00 | 70.00 | 60.00 |
| Total Cash Inflow from Sales | 325.00 | 322.50 | 302.50 | 285.00 | 317.50 | 347.50 | 372.50 | 392.50 | 377.50 | 350.00 | 307.50 | 277.50 |
| Payments for Purchases | ||||||||||||
| 30 Day (40%* Previous Month) | (23.68) | (23.68) | (23.68) | (23.68) | (23.68) | (23.68) | (23.68) | (23.68) | (23.68) | (23.68) | (23.68) | (23.68) |
| 60 Day (60% *two months before) | 0.00 | (35.52) | (35.52) | (35.52) | (35.52) | (35.52) | (35.52) | (35.52) | (35.52) | (35.52) | (35.52) | (35.52) |
| Total Cash Outflow for Purchases | (23.68) | (59.20) | (59.20) | (59.20) | (59.20) | (59.20) | (59.20) | (59.20) | (59.20) | (59.20) | (59.20) | (59.20) |
| Disbursements | ||||||||||||
| Freight | (4.20) | (4.00) | (5.10) | (5.40) | (7.30) | (6.50) | (6.70) | (6.60) | (6.10) | (7.00) | (5.80) | (5.70) |
| Labor | (40.00) | (39.00) | (38.00) | (42.00) | (38.40) | (44.30) | (42.50) | (41.00) | (38.00) | (39.00) | (39.50) | (38.00) |
| Utilities Insurance, etc. | (2.50) | (2.20) | (2.40) | (2.50) | (2.50) | (2.80) | (2.70) | (2.50) | (2.60) | (2.60) | (2.60) | (2.40) |
| Salaries- Selling | (60.00) | (62.00) | (65.80) | (62.80) | (62.70) | (67.90) | (71.60) | (62.80) | (64.90) | (66.90) | (68.00) | (65.00) |
| Commissions | (5.90) | (5.00) | (5.80) | (6.80) | (6.90) | (7.40) | (8.00) | (7.80) | (6.50) | (6.80) | (6.40) | (6.40) |
| Travel | (7.00) | (7.10) | (6.90) | (6.80) | (7.60) | (7.80) | (8.40) | (7.50) | (7.70) | (7.70) | (7.90) | (7.40) |
| Advertising | (6.00) | (6.50) | (7.00) | (9.00) | (8.50) | (8.70) | (8.30) | (8.10) | (7.00) | (7.20) | (6.00) | (7.50) |
| Other charges | (5.00) | (6.00) | (3.00) | (40.00) | (50.00) | (21.50) | (18.30) | (18.70) | (18.90) | (16.00) | (8.50) | (14.00) |
| Selling Salaries | (35.00) | (35.00) | (34.00) | (33.00) | (36.00) | (36.00) | (38.00) | (39.00) | (35.00) | (33.00) | (32.00) | (34.00) |
| Leasing | (5.80) | (5.80) | (5.80) | (5.80) | (5.80) | (5.80) | (5.80) | (5.80) | (5.80) | (5.80) | (5.80) | (5.80) |
| Research | (8.30) | (10.30) | (15.60) | (7.50) | (8.30) | (7.70) | (7.90) | (6.20) | (6.70) | (6.90) | (6.30) | (8.30) |
| Taxes | (9.30) | (9.30) | (9.30) | (9.30) | (9.30) | (9.30) | (9.30) | (9.30) | (9.30) | (9.30) | (9.30) | (9.30) |
| Cash Outflow For Disbursements | (189.00) | (192.20) | (198.70) | (230.90) | (243.30) | (225.70) | (227.50) | (215.30) | (208.50) | (208.20) | (198.10) | (203.80) |
| Total Cash Outflow from Operating Activities | (212.68) | (251.40) | (257.90) | (290.10) | (302.50) | (284.90) | (286.70) | (274.50) | (267.70) | (267.40) | (257.30) | (263.00) |
| Cash Flow From Operating Activities | 112.32 | 71.10 | 44.60 | (5.10) | 15.00 | 62.60 | 85.80 | 118.00 | 109.80 | 82.60 | 50.20 | 14.50 |
| Cash Out Flow From Investing Activities | ||||||||||||
| Purchase of assets | (40.00) | (45.00) | (33.00) | (350.00) | (500.00) | (16.80) | (23.80) | (23.00) | (18.00) | (20.00) | (20.00) | (10.00) |
| Cash Flow For the Month | 72.32 | 26.10 | 11.60 | (355.10) | (485.00) | 45.80 | 62.00 | 95.00 | 91.80 | 62.60 | 30.20 | 4.50 |
| Balance b/f from Previous month | 617.50 | 689.82 | 715.92 | 727.52 | 372.42 | (112.58) | (66.78) | (4.78) | 90.22 | 182.02 | 244.62 | 274.82 |
| Balance at the end of month | 689.82 | 715.92 | 727.52 | 372.42 | (112.58) | (66.78) | (4.78) | 90.22 | 182.02 | 244.62 | 274.82 | 279.32 |
* Note: Assumed Negative Cash Balance Implies a Bank Overdraft
Note 2: The reason for negative Cash Balance in May, June and July: Purchase of Assets 350 and 500 in month of April and May,respectively
jeff jeffy answered 6 months agoRelated Solutions
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