Case Study 3 Cash Budget
Case Study 3 - Cash Budget
SCHEDULE OF EXPECTED CASH COLLECTIONS FROM CUSTOMERS:
Credit Sales August September
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 customers 26,400 20,400 Sale of plant assets 12,350 Sale of new common stock 16,850 Cash sales 51,000 39,000
Total receipts 89,750 76,250
Total Available Cash 99,750 86,250
Less: Disbursements Purchases of inventory 55,000 33,000 Operating expenses 6,750 6,750 Selling and administrative expenses 12,500 12,500 Dividends 19,000 Equipment purchase 6,000
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
SCHEDULE OF EXPECTED CASH COLLECTIONS FROM CUSTOMERS:
Credit Sales August September
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 customers 26,400 20,400 Sale of plant assets 12,350 Sale of new common stock 16,850 Cash sales 51,000 39,000
Total receipts 89,750 76,250
Total Available Cash 99,750 86,250
Less: Disbursements Purchases of inventory 55,000 33,000 Operating expenses 6,750 6,750 Selling and administrative expenses 12,500 12,500 Dividends 19,000 Equipment purchase 6,000
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