For the Two Months of May and June
Collections from customers92,65085,150
Sale of plant assets33,000
Sale of new common stock50,000
Total Available Cash220,650212,150
Purchases of inventory171,000106,200
Selling and administrative expenses10,15010,150
Total disbursements 196,150 170,350
Excess (deficiency of available cash over disbursements) 24,500 41,800
Ending cash balance$24,500 41,800
Please answer the 3 qualitative questions on the next tab called Qualitative Questions.
What are the three sections of a Cash Budget, and what is included in each section? The three sections of a Cash Budget are cash receipts, cash disbursements and financing. The cash recipt section includes: collected amounts from credit sales, cash sales, as well as expected interest and dividends. As well as Sale of plant assets and common stock. The cash disbursement section includes: Purchases of inventory, operating expenses, selling and administrative expenses, dividends, and equipment purchases. The financing section includes: expected borrowing amounts, repayments of loans plus interest.
Why is a Cash Budget so vital to a company?
A cash budget is vital to a company to forecast their flow of cash and make sure that they can cover expected costs against projected cash received.
What are the five basic principles of cash management that a company can follow in order to improve its chances of having adequate cash? Plan for major expenditures, Keep inventory levels as low as possible, Invest excess cash, Pay payables as late...