Answer:
Castor, Inc.
Cash Budget for the quarter ended June 30,
April May June
Beginning cash balance $13,500 $16,165 $31,795
Cash collection (25%) 13,500 7,625 10,375
Cash collection (75%) 22,875 31,125 19,125
Total cash receipts $49,875 $54,915 $61,295
Cash payments for goods 23,200 15,300 15,700
Sales commission (5% sales) 1,525 2,075 1,275
Shipping cost (3% sales) 915 1,245 765
Office salaries 4,500 4,500 4,500
Cash Disbursements $30,140 $23,120 $22,240
Loans Payable (Repayment) -3,570
Cash balance $16,165 $31,795 $39,055
Explanation:
A cash budget is a tool used by a company's management to forecast of the cash receipts and cash disbursements for a future period of time. It is an important financial management tool that can be used to decide when to borrow cash to meet shortages and when to invest excess cash to generate income. Through its preparation, management avoids liquidity problems which can ruin a business.
