Answer:
Cash Surplus May $83,300 June $ 61,600 July $33,000
Aug $25,500 Sept $ 3650
Explanation:
MONTH AND YEAR PROJECTED SALES FIRST MONTH
COLLECTIONS (80%)
April 20X1 $ 140,000 112,000
May 20X1 130,000 104,000
June 20X1 90,000 72,000
July 20X1 65,000 52,000
August 20X1 84,000 67,200
September 20X1 95,000 76,000
October 20X1 160,000 128,000
November 20X1 200,000 160,000
December 20X1 240,000 192,000
January 20X2 190,000 152,000
<u><em>First we find the monthly cash collections 80 % in the month of sales , 10% in the second month , 5% in the third and 5 % in the fourth . We have summed them up in the following table.</em></u>
Sales Collections
MAY JUNE JULY AUGUST SEPT
Particulars
1st Month 104,000 72,000 52,000 67,000 76,000
Collections
2nd Month 14,000 13,000 9000 6500 8400
3rd Month 7000 6500 4500 3250
<u>4th Month 7000 6500 4500</u>
Total
Collections 118,000 92,000 74,500 84,500 92,150
<u><em>Now we prepare the cash budget deducting payments from collections and maintaining beginning and ending balance.</em></u>
<u>Cash Budget</u>
<u> MAY JUNE JULY AUGUST SEPT</u>
<em>Particulars</em>
Opening 10,000 10,000 10,000 10,000 10,000
Add Total
Collections 118,000 92,000 74,500 84,500 92,150
Less Closing 10,000 10,000 10,000 10,000 10,000
<u>Less Payments34,700 30,400 41,500 59,000 88,500 </u>
<u> Cash Surplus 83,300 61,600 33,000 25,500 3650</u>
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