Cash Budget - Seatwork.

A Company is planning to purchase a machine worth P720,000 sometime in July 2012. You are required to prepare the cash
budget if this plan is feasible. The following information is made available to you:
Monthly Sales Forecast
April (actual)
1,100,000.00
May (actual)
1,200,000.00
June
1,000,000.00
July
900,000.00
August
850,000.00
September
950,000.00
October
1,200,000.00
November
1,500,000.00
December
1,700,000.00
January 2013
1,000,000.00

50% of sales are collected in the month of sales, 30% after month of sales and 18% two months after sale. The
company provides for 2% allowance for uncollectible accounts.
Raw materials are 60% of sales are purchased a month before the sales. 30% are paid in the month of purchase, 40%
on the following month and 30% two months after the purchase.
The company incurs fixed P150,000 operating expenses every month. Commissions paid are 10% of sales. Other
variable operating expenses are about 5% of sales.
Monthly depreciation is P60,000 but will increase by P15,000 starting August when the machine is purchased.
Taxes are to be paid on the following dates:
o August
P 298,350
o November
150,150
Target Cash balance is P 100,000
Cash balance at the end of May is P200,000.
Amounts at bundles of P10,000 can be borrowed to finance any shortages which is assumed to be made at the
beginning of every month. Interest per month is 2%. Interest and principal amount is paid at the end of the period

-------------------------------------------------------------------------------------------------------------------------------------------------------------------------Cash Budget - Seatwork.

A Company is planning to purchase a machine worth P720,000 sometime in July 2012. You are required to prepare the cash
budget if this plan is feasible. The following information is made available to you:
Monthly Sales Forecast
April (actual)
1,100,000.00
May (actual)
1,200,000.00
June
1,000,000.00
July
900,000.00
August
850,000.00
September
950,000.00
October
1,200,000.00
November
1,500,000.00
December
1,700,000.00
January 2013
1,000,000.00

50% of sales are collected in the month of sales, 30% after month of sales and 18% two months after sale. The
company provides for 2% allowance for uncollectible accounts.
Raw materials are 60% of sales are purchased a month before the sales. 30% are paid in the month of purchase, 40%
on the following month and 30% two months after the purchase.
The company incurs fixed P150,000 operating expenses every month. Commissions paid are 10% of sales. Other
variable operating expenses are about 5% of sales.
Monthly depreciation is P60,000 but will increase by P15,000 starting August when the machine is purchased.
Taxes are to be paid on the following dates:
o August
P 298,350
o November
150,150
Target Cash balance is P 100,000
Cash balance at the end of May is P200,000.
Amounts at bundles of P10,000 can be borrowed to finance any shortages which is assumed to be made at the
beginning of every month. Interest per month is 2%. Interest and principal amount is paid at the end of the period

Cash Budget Assignment

Problem 1. Fun Toys wants to determine its cash position for the first four months of the calendar year 2012. The
following sales data are made available:
October 2011(actual)
November 2011(actual)
December 2011(actual)
January

P 100,000
130,000
80,000
100,000

February
March
April

P 200,000
150,000
100,000

Forty percent of sales are collected in the month of sale; thirty percent one month after sale and twenty eight
percent two months after the sale. Any uncollected accounts, two months after the sale are written off.
Purchases are one half of next months sales. These are paid a month following the purchase.
Salaries are fixed at P10,000 per month. In addition, commissions paid to sales agent are two percent of sales.
Administrative expenses are both fixed and variable. Fixed admin expenses amounts to P20,000 per month and
includes depreciation charges. Variable admin expense is one and one half percent of sales.
As of December 31, 2011 the company has an equipment (the only depreciable asset) which has a book value of
P20,000 and is to be disposed on March 2012. Upon disposal, this equipment is to be sold for P5,000, its
estimated salvage value. The company depreciates its assets using straight line method.
On April, a replacement of the retired equipment costing P120,000 is to be purchased for cash. This asset will be
depreciated on a monthly rate of 5%.
A minimum cash balance of P7,500 is to be maintained.
Any cash deficiency can be availed at exact amount with 2% interest per month. This loan, together with the
interest is to be paid on April of 2011 if cash is available.

Requirement: Prepare cash budget for the first four months of 2012, showing the excess cumulative cash/ cumulative loan
requirement for each month and amounts in total.
Problem 2. On a separate sheet of paper, prepare a cash budget for the first four months of 2006, showing the amount of
cumulative excess cash (loan balance).
Basic company has planned a cash budget for the first four months. Estimates show that P60,000 should be
collected in January and April for the dividends to be received from investments in stock of other companies. Each month,
operating expenses for wages, rents, lights and others estimated to be P100,000 plus 10% of the preceding month sales.
Sales and collections on accounts receivables are estimated as follows:
50% collected in the month of sale
30% collected in the month following the sale
20% collected in the second month following the sale
Payments for the merchandise purchased are scheduled so that 60% of the payments are made in the month of
purchase with the balance paid the following month. The cash balance is estimated at P175,000 for January 1, 2006.
Estimated net sales and purchases for the months are as follows:
Net Sales
Purchases
November
P 560,000
P 320,000
December
550,000
380,000
January 2006
640,000
420,000
February
700,000
400,000
March
650,000
350,000
April
580,000
280,000
An income tax payment of P75,000 is to be made in January and final payment of P100,000 is to be made in
April. A loan repayment of P100,000 with P10,000 interest added will be made in February. Capital asset acquisition is
scheduled for January for P100,000 and in March for P125,000. A minimum cash balance of P150,000 must be
maintained at the end of each month. Amounts at bundles of P10,000 can be borrowed to finance any shortages which is
assumed to be made at the beginning of every month. Interest per month is 2%. Interest and principal amount is paid at
the end of the period.