Answer and Explanation:
The preparation of the cash flow budget is presented below:
Cash Flow Budget
Particulars Jan 2021 Feb 2021 Mar 2021 Apr 2021 May 2021 Jun 2021
Opening Balance $1,000 $1,400 $2,000 $4,600 $8,300 $11,700
Sales $4,000 $4000 $6,000 $7,500 $7,500 $7,500
(2,000 × 2) (2,000 × 2) (2,000 × 3) (2,500 × 3) (2,500 × 3) (2,500 × 3)
Total Cash Inflow $5,000 $5,400 $8,000 $12,100 $15,800 $19,200
Less: Cash payments
Less: Bonus to employees $1,000 $800 $800 $800 $1,500 $1,500
(5,000 × 20%
) (4,000 × 20%
) (4,000 × 20%
) (4,000 × 20%
) (7,500 × 20%
) (7,500 × 20%
)
Less: Overhead Cost 2,000 2,000 2,000 2,000 2,000 2,000
Less: Direct material & Direct Labor 500 500 500 500 500 500
Less: Fixed Cost 100 100 100 100 100 100
Net cash generated (A) 400 600 600 4100 3400 3400
Opening Cash balance (B) 1000 1400 2000 2600 6700 10100
Closing Balance (A+B) 1400 2000 4600 8300 11700 15100
Balance as on 30 June 2021 = 15100
We simply deduct all cash payments from the all cash receipts so that the ending balance or closing balance could come
