Management Accounting

Cash Budget
Cash Budget is a statement of cash inflow and cash
outflow a certain period.
একটি নিনদিষ্ট সময়ের ময়যে িগদ িাকার আন্তঃপ্রবাহ ও বনহঃপ্রবাহ এর
নববরিী ।

Problem-01:
Royal Industries expects credit sales for January, February and March to be Tk.
2,00,000; 2,60,000; and 3,10,000 respectively. It is expected that 70% of the
sales will be collected in the month of sale and 30% will be collected in the
following month. Compute cash collection from customers for each month.

Solution: Collection from Customers

Collections from customers
Credit Sales January February March
January- 2,00,000 1,40,000 60,000
February - 2,60,000 1,82,000 78,000
March – 3,10,000 2,17,000
Total 1,40,000 2,42,000 2,95,000
 Class-02
Problem-02:
From the following information supplied by ABC Pharmaceutical Co.
Prepare a cash budget from 1st October, 2019 to 31st December, 2019.
Wages & Other
Months Credit Purchase Credit Sales Exp.
August 92,000 1,85,000 58,000
September 100000 210000 65000
October 120000 245000 75000
November 90000 178000 54000
December 98000 182000 56000
Other Information:
1. Expected cash balance on 1st October tk. 10500
2. Period of credit allowed to debtors 2 months
3. Period of credit allowed by creditors 1 month
4. Lag in payment of wages & other expenses 1 month
5. Selling commission @ 2% on sales is payable one month after sales.
6. Expenditure on machinery worth tk. 50000 is payable in October.
Solution:
Workings-1:
Collection from Debtors
Month of Collection
Months Credit Sales
October November December
August 1,85,000 185000
September 210000 210000
October 245000 245000
November 178000
December 182000
Workings-2:
Payments to Creditors

Credit Month of Payments

Months
Purchase October November December
August 92,000
September 100000 100000
October 120000 120000
November 90000 90000
December 98000

Workings-3:
Payments of Wages & Other Exp.

Wages & Other Month of Payments

Months Exp. October November December
August 58,000
September 65000 65000
October 75000 75000
November 54000 54000
December 56000

Workings-4:
Calculation of Sales Commission
Sales Month of Payment
Credit Commission
Months
Sales @2% October November December
August 1,85,000 3700
September 210000 4200 4200
October 245000 4900 4900
November 178000 3560 3560
December 182000 3640
 ABC Pharmaceutical Co.
Cash Budget
For October, November, December
Details October November December
Opening Balance 10,500 (23700) (13600)
(+) Cash Collection 185000 210000 245000
Total Cash Receipts 195500 186300 231400

(-) Cash Payments:

Creditors 100000 120000 90000
Wages & Other Exp. 65000 75000 54000
Sales Commission 4200 4900 3560
Expenditure on Machinery 50000
Total Cash Payments 219200 199900 147560
Closing Balance (23700) (13600) 83840

Problem-03:

From the following information prepare a cash budget for the three months
commencing 1 June 2019, The bank balance on that day is Tk. 1,10,000.
Selling Factory Admin.
Months Purchase Sales Wages
O/H O/H O/H
April 37000 88500 8000 3250 5680 2500
May 40000 84000 8400 4100 5920 2750
June 39000 93000 8800 3710 2440 2480
July 39000 72000 6000 3210 5880 2600
August 35000 82000 9600 3600 6000 2520
Other Information:
1. A sales commission of 2% on sales are due, 2 months after sales in
payable in addition to the above selling overheads.
2. Plant purchase in June 01 for Tk 38000. Payable on delivery
3. Building Purchases in the month of June for Tk. 80000. Payable in
two half yearly installment, the 1st in the month of July.
4. A dividend of Tk. 20000 will be paid in July.
5. Sales and purchase are made 10% in cash. Credit allowed by
suppliers is one month. Debtors are allowed two months credit.
6. Time lag in payment wages and all other overheads is 15 days and
Half month installment.

Solution:

Workings-1: Calculation of Collection:

Sales Commission Month of Collection

Months
Total Cash 10% Credit 90% @ 2% June July August
April 88500 8850 79650 1770 79650
May 84000 8400 75600 1680 75600
June 93000 9300 83700 1860 83700
July 72000 7200 64800 1440
August 82000 8200 73800 1680

Workings-02: Calculation of Purchase Payments

Purchase Month of Payments

Months
Total Cash 10% Credit 90% June July August
April 37000 3700 33300
May 40000 4000 36000 36000
June 39000 3900 35100 35100
July 39000 3900 35100 35100
August 35000 3500 31500
Workings-03:

Months Wages Selling O/H Factory O/H Admin. O/H

(4100+3710) /2 (5920+2440) (2760+2480) /2

(8400+8800)/2
June = 3905 /2 = 2620
= 8600
= 4180
(8800+6000)/2 (3710+3210) /2 (2440+5880)/2 (2480+2600) /2
July
= 7400 = 3460
(6000+9600) /2 (3210+3600) /2 (5880+6000)/2 (2600+2520) /2
August
= 7800 = 3405 = 2560

Cash Budget
Details June July August
Opening Balance 110000 100575 65135
(+) Cash Receipts:
Cash Sales 9300 7200 8200
Collection from Debtors 79650 75600 83700
Total Cash Receipts 198950 183375 157035

(-) Cash Payments:

Cash Purchase 3900 3900 3500
Payments to Creditors 36000 35100 35100
Sales Commission 1770 1680 1860
Plant Purchase 38000 - -
Building Purchase - 40,000 -
Wages 8600 7400 7800
Selling O/H 3905 3460 3405
Factory O/H 4180 4160 5905
Admin. O/H 2620 2540 5940
Total Cash Payments 98375 118240 66070
Closing Balance 65135 90965
100575
====
Problem-04:
ABC Furniture has the following forecasted data:
September October
Cash Sales 40,000 60000
Sales on Credit 77500 95000
Cash Purchase 20000 20000
Purchase on credit 100000 80000
Purchase Discount 6000 3000
Accounts Payable (Beginning) 10000 12000
Accounts Payable (Ending) 12000 9000
Cash operating expenses 46500 10000
Net Sales on credit are collected 50% in the month of sales, 40% in the
following month and 10% in 2nd following month. Such sales in July
and August were Tk. 100000 and Tk 120000 respectively. The
estimated September 1 Cash Tk. 13000.
Prepare a cash budget for the month of September and October.
50% 40% 10%
Workings-1: Calculation of Cash Collection:
September = 50% of September Sales + 40% of August Sales + 10% July Sales)
= (77,500 × 50%) + (120000 × 40%) + (100000 ×10%)

= 38750+48000+10000

= 96750

October = 50% of October Sales + 40% of September Sales + 10% August Sales)

= (95,000 × 50%) + (77500 × 40%) + (120000 ×10%)

= 47500+31000+12000

= 90500
Workings-2:

Calculation of Payment of Creditors:

Details September October

Opening Balance 10000 12000
(+) Credit Purchase 100000 80000
(-) Discount (6000) (3000)
(-) Ending Balance (12000) 9000
Cash Payment 92000 80000

Cash Budget
ABC Furniture
Details September October
Opening Balance 13000 (8750)
(+) Cash Receipts:
Cash Sales 40000 60000
Collection from Debtors 96750 90500
Total Cash Collection 149750 141750

(-) Cash Payments:

Cash Purchase 20000 20000
Paid to Creditors 92000 80000
Paid to operating exp. 46500 10000
Total Cash Payments 158500 110000
Closing Balance (8750) 31750
Problem-05:

Solution:

Workings- 3: Cash Payment for wages and other exp:

 Cash Budget
For the month of January to March

Problem-06:
 .
0

Problem-07:
Solution:
Req-i:
Schedule of expected cash collections for April, May &
June
Req-ii:
Problem-08:
78000