TABLE 6-8 Pro Forma Cash Budget Monthly Cash Recelpts Actual Sales 2012 Pro Forma Sales and Cash Recelpts 2013 October November December January February March April мay June July August Seprember October November December Sales $17,625 $20,250 $22,500 $13,000 $14,500 $14,000 $19,000 $23,000 $24,500 $21,000 $17,500 $23,000 $23,500 $27,000 $30,000 Current Month Collection at 30% 5,288 6,075 6,750 3,900 4,350 4,200 5,700 6,900 7,350 6,300 5,250 6,900 7,050 8,100 9,000 of Sales Outstanding Current Month Accounts Recelvable (AR) 12,338 14.175 15,750 9,100 10,150 9,800 13,300 16,100 17,150 14,700 12,250 16,100 16,450 18,900 21,000 60% of AR Collected Month 7,403 8,505 9,450 5,460 6,090 5,880 7,980 9,660 10,290 8,820 7,350 9,660 9,870 11,340 Following Sale 40% of AR Collected In Second Month Following Sale Total Recelpts 4,935 5,670 6,300 3,640 4,060 3,920 5,320 6,440 6,860 5,ве0 4,900 6,440 6,580 $20,190 $19,020 $16,110 $13,930 $15,640 $18,800 $2,330 $23,030 $20,930 $20,130 $21,610 $24,410 $26,920 Monthly Cash Payments Accounts Payable (AP) Previous $10,125 $11,250 $ 6,500 $ 7,250 $ 7,000 $ 9,500 $11,500 $12,250 $10,500 $ 8,750 $11,500 $11,750 $13,500 Month 8,450 Operating Expenses Interest Payments Total Payments 8,450 567 $20,267 $15,517 $16,267 $16,017 $18,517 $20,517 $21,267 $19,517 8,450 8,450 8,450 8,450 8,450 8,450 567 8,450 8,450 567 $20,517 8,450 8,450 567 $22,517 567 567 567 567 Б87 Б67 567 567 $17,767 $20,767 Monthly Cash Budget Total Recelpts Total Payments Net Cash Flow $19,020 $16,110 $13,930 $15,640 $18,800 $2,330 $23,030 $20,930 20,267 $(1,247) $ 593 $12,337) S (377) $ 283 $ 1,813 $ 1,763 S 1,413 $20,130 17,767 $ 2,363 $21,610 $24,410 20,767 $ 1,093 $ 3,643 $26,920 22,517 $ 4,403 15,517 16,267 16,017 18,517 20,517 21,267 19,517 20,517 Cash Budget With Borrowing and Repayment $ (1,247) $ 593 $ (2,337) $ (377) $ 283 $ 1,813 $ 1,763 $ 1,413 4,000 3,623 377 $ 2,363 4,000 6,363 (2,363) $ 1,093 4,000 5,093 (1,093) 3,640 $ 3,643 4,000 7,643 (3,640) $ 4,403 4,003 8,406 Net Cash Flow Beginning Cash Balance Total Cash Balance 4,000 4,000 4,000 $ 2,753 $ 4,593 $ 1,663 (593) 4,000 4,283 4,000 5,763 (1,813) (1,763) (1,413) 4,000 5,813 4,000 5,413 Monthly Loan or (Repayment) 1,247 2,337 (283) Cumulative Loan Balance 9000 10,247 9,654 11,991 12,368 12,085 10,272 8,509 7,096 4,733 Ending Cash Balance $ 4,000 $ 4,000 $ 4,000 $ 4,000 $ 4,000 $ 4,000 $ 4,000 $ 4,000 S 4,000 $ 4,000 $ 4,000 $ 4,003 S 8,406

TABLE 6-8 Pro Forma Cash Budget Monthly Cash Recelpts Actual Sales 2012 Pro Forma Sales and Cash Recelpts 2013 October November December January February March April мay June July August Seprember October November December Sales $17,625 $20,250 $22,500 $13,000 $14,500 $14,000 $19,000 $23,000 $24,500 $21,000 $17,500 $23,000 $23,500 $27,000 $30,000 Current Month Collection at 30% 5,288 6,075 6,750 3,900 4,350 4,200 5,700 6,900 7,350 6,300 5,250 6,900 7,050 8,100 9,000 of Sales Outstanding Current Month Accounts Recelvable (AR) 12,338 14.175 15,750 9,100 10,150 9,800 13,300 16,100 17,150 14,700 12,250 16,100 16,450 18,900 21,000 60% of AR Collected Month 7,403 8,505 9,450 5,460 6,090 5,880 7,980 9,660 10,290 8,820 7,350 9,660 9,870 11,340 Following Sale 40% of AR Collected In Second Month Following Sale Total Recelpts 4,935 5,670 6,300 3,640 4,060 3,920 5,320 6,440 6,860 5,ве0 4,900 6,440 6,580 $20,190 $19,020 $16,110 $13,930 $15,640 $18,800 $2,330 $23,030 $20,930 $20,130 $21,610 $24,410 $26,920 Monthly Cash Payments Accounts Payable (AP) Previous $10,125 $11,250 $ 6,500 $ 7,250 $ 7,000 $ 9,500 $11,500 $12,250 $10,500 $ 8,750 $11,500 $11,750 $13,500 Month 8,450 Operating Expenses Interest Payments Total Payments 8,450 567 $20,267 $15,517 $16,267 $16,017 $18,517 $20,517 $21,267 $19,517 8,450 8,450 8,450 8,450 8,450 8,450 567 8,450 8,450 567 $20,517 8,450 8,450 567 $22,517 567 567 567 567 Б87 Б67 567 567 $17,767 $20,767 Monthly Cash Budget Total Recelpts Total Payments Net Cash Flow $19,020 $16,110 $13,930 $15,640 $18,800 $2,330 $23,030 $20,930 20,267 $(1,247) $ 593 $12,337) S (377) $ 283 $ 1,813 $ 1,763 S 1,413 $20,130 17,767 $ 2,363 $21,610 $24,410 20,767 $ 1,093 $ 3,643 $26,920 22,517 $ 4,403 15,517 16,267 16,017 18,517 20,517 21,267 19,517 20,517 Cash Budget With Borrowing and Repayment $ (1,247) $ 593 $ (2,337) $ (377) $ 283 $ 1,813 $ 1,763 $ 1,413 4,000 3,623 377 $ 2,363 4,000 6,363 (2,363) $ 1,093 4,000 5,093 (1,093) 3,640 $ 3,643 4,000 7,643 (3,640) $ 4,403 4,003 8,406 Net Cash Flow Beginning Cash Balance Total Cash Balance 4,000 4,000 4,000 $ 2,753 $ 4,593 $ 1,663 (593) 4,000 4,283 4,000 5,763 (1,813) (1,763) (1,413) 4,000 5,813 4,000 5,413 Monthly Loan or (Repayment) 1,247 2,337 (283) Cumulative Loan Balance 9000 10,247 9,654 11,991 12,368 12,085 10,272 8,509 7,096 4,733 Ending Cash Balance $ 4,000 $ 4,000 $ 4,000 $ 4,000 $ 4,000 $ 4,000 $ 4,000 $ 4,000 S 4,000 $ 4,000 $ 4,000 $ 4,003 S 8,406

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

Your projected sales for the first 3 months of next year are as follows:
January, $15,000; February, $20,000; and March, $25,000. Based on last
year’s data, cash sales are 20 percent of total sales for each month. Of the
accounts receivable, 60 percent are collected in the month after the sale and
40 percent are collected in the second month following the sale. Sales for
November of the current year are $15,000 and for December are $17,000.
You have the following estimated payments: January, $4,500; February,
$5,500; and March, $5,200.
a. Using the format from the pro forma cash budget in Table 6–8, what is your
monthly cash budget for January, February, and March?
b. What will your accounts receivable be for the beginning of April?
c. Will your company have any borrowing requirements for any month during
this 3-month period?

TABLE 6-8 Pro Forma Cash Budget
Monthly Cash Recelpts
Actual Sales 2012
Pro Forma Sales and Cash Recelpts 2013
October November December January February March
April
мay
June
July
August Seprember October November December
Sales
$17,625 $20,250
$22,500
$13,000 $14,500 $14,000 $19,000 $23,000 $24,500 $21,000 $17,500
$23,000
$23,500 $27,000
$30,000
Current Month Collection at 30%
5,288
6,075
6,750
3,900
4,350
4,200
5,700
6,900
7,350
6,300
5,250
6,900
7,050
8,100
9,000
of Sales
Outstanding Current Month
Accounts Recelvable (AR)
12,338
14.175
15,750
9,100
10,150
9,800 13,300
16,100
17,150
14,700
12,250
16,100
16,450
18,900
21,000
60% of AR Collected Month
7,403
8,505
9,450
5,460
6,090
5,880
7,980
9,660
10,290
8,820
7,350
9,660
9,870
11,340
Following Sale
40% of AR Collected In Second
Month Following Sale
Total Recelpts
4,935
5,670
6,300
3,640
4,060
3,920
5,320
6,440
6,860
5,ве0
4,900
6,440
6,580
$20,190
$19,020 $16,110 $13,930 $15,640 $18,800 $2,330 $23,030 $20,930
$20,130
$21,610 $24,410
$26,920
Monthly Cash Payments
Accounts Payable (AP) Previous
$10,125
$11,250 $ 6,500
$ 7,250 $ 7,000 $ 9,500 $11,500 $12,250 $10,500
$ 8,750
$11,500
$11,750
$13,500
Month
8,450
Operating Expenses
Interest Payments
Total Payments
8,450
567
$20,267 $15,517 $16,267 $16,017 $18,517 $20,517 $21,267 $19,517
8,450
8,450
8,450
8,450
8,450
8,450
567
8,450
8,450
567
$20,517
8,450
8,450
567
$22,517
567
567
567
567
Б87
Б67
567
567
$17,767
$20,767
Monthly Cash Budget
Total Recelpts
Total Payments
Net Cash Flow
$19,020 $16,110 $13,930 $15,640 $18,800 $2,330 $23,030 $20,930
20,267
$(1,247) $ 593 $12,337) S (377) $ 283 $ 1,813 $ 1,763 S 1,413
$20,130
17,767
$ 2,363
$21,610
$24,410
20,767
$ 1,093 $ 3,643
$26,920
22,517
$ 4,403
15,517
16,267
16,017
18,517 20,517 21,267
19,517
20,517
Cash Budget With Borrowing and Repayment
$ (1,247) $ 593 $ (2,337) $ (377) $ 283 $ 1,813 $ 1,763 $ 1,413
4,000
3,623
377
$ 2,363
4,000
6,363
(2,363)
$ 1,093
4,000
5,093
(1,093)
3,640
$ 3,643
4,000
7,643
(3,640)
$ 4,403
4,003
8,406
Net Cash Flow
Beginning Cash Balance
Total Cash Balance
4,000
4,000
4,000
$ 2,753 $ 4,593 $ 1,663
(593)
4,000
4,283
4,000
5,763
(1,813) (1,763) (1,413)
4,000
5,813
4,000
5,413
Monthly Loan or (Repayment)
1,247
2,337
(283)
Cumulative Loan Balance
9000
10,247
9,654
11,991
12,368
12,085
10,272
8,509
7,096
4,733
Ending Cash Balance
$ 4,000
$ 4,000 $ 4,000 $ 4,000 $ 4,000 $ 4,000 $ 4,000 $ 4,000 S 4,000
$ 4,000
$ 4,000
$ 4,003
S 8,406

Definition Definition Estimate of an organization's cash flow for a future period. A cash budget forecasts future cash receipts and payments from various sources for a fiscal year. A cash budget can be created once a month or once a week to determine the organization's cash position and ensure its performance in relation to the budget. It aids in determining whether the company has enough cash and cash equivalents to meet its operational needs in the future.

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