Case Study 3 Cash Budget

Topics: Money, Investment, Asset Pages: 3 (746 words) Published: May 15, 2012
Case Study 3 - Cash Budget

SCHEDULE OF EXPECTED CASH COLLECTIONS FROM CUSTOMERS:
Credit SalesAugustSeptember
July ($30,000 x 40%) 12,000
August ($24,000 x 60%), September ($24,000 x 40%) 14,400 9,600 September ($18,000 x 60%) 10,800
Total Cash Collections 26,400 20,400

SCHEDULE FOR EXPECTED PAYMENTS FOR PURCHASE OF INVENTORY Inventory purchases August September
July ($65,000 x 50%) 32,500
August ($45,000 x 50%), September ($45,000 x 50%) 22,500 22,500 September ($21,000 x 50%) 10,500
Total Payments for Inventory Purchases 55,000 33,000

Oxford Company
Cash Budget
For the Two Months of August and September
August September
Cash balance$10,000$10,000
Add: Receipts
Collections from customers26,40020,400
Sale of plant assets12,350
Sale of new common stock16,850
Cash sales51,00039,000
Total receipts89,75076,250
Total Available Cash99,75086,250
Less: Disbursements
Purchases of inventory55,00033,000
Operating expenses6,7506,750
Selling and administrative expenses12,50012,500
Dividends19,000
Equipment purchase6,000
Total disbursements 93,250 58,250
Excess (deficiency of available cash over disbursements) 6,500 28,000

Financing
Borrowings 3,500
Repayments($3,500 x 12% x 2/12 = $70 + $3,500 = $3,570) 3,570 Ending cash balance$10,000 31,570

1)What are the three sections of a Cash Budget, and what is included in each section?

The cash budget has three sections : cash receipts, cash disbursements, and financing. The cash receipts section contains expected receipts of the company's main source of cash, such as cash sales, collections from customers, sales of plant assets, and sales of new common stock. The cash disbursements section contains receipts of expected cash payments...
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