Cyrus Brown`s Cash Budget

CYRUS BROWN`S CASH BUDGET

CyrusBrown`s Cash Budget

Student`sname

Cashbudget

Workings

Oncalculating the total sales income, one must note the percentageamount collected in each month. For example the total sales for themonth of March is $100,000 where 25% ($25,000) of it is collected inthe same month, 55% ($55,000) is collected in the month of April and20% ($20,000) in the month of May. From the cash budget, the receiptscollection have been broken down for each months sales collection andthe formulas are also given in the excel spread sheet attached.

Salecollection for each month

March=&gt (25%*100,000) = 25,000

April=&gt (55%*100,000 + 25%*275,000 + 123,000) = 123,750

May=&gt (20%*100,000 + 55%*275,000 + 25%*320,000) = 251,250

June=&gt (25%*450,000 + 55%*320,000 + 20%*275,000) =343,500

July=&gt (25%*700,000 + 55%*450,000 + 20%320,000) = 486,500

August=&gt (25%*700,000 + 55%*700,000 + 20%* 450,000) = 650,000

September=&gt (25%*825,000 + 55%*700,000 + 20%*450,000) = 731,250

October=&gt (25%*500,000 + 55%*825,000 + 20%*700,000) = 718,750

November=&gt(25%*115,000 + 55%*500,000 + 20%*825,000) = 768.750

Itis also essential to note that the payments for the manufacturingcost, that is, raw material and labour are paid in the monthfollowing the month that the cost was incurred. For example, $187,500incurred on March will be paid in the month of April, and so on.

Salariesof $35,000, lease payments of $15,000 and miscellaneous costs of$10,000 are incurred every month and should be included underdisbursements section.

Expensesin every month

Salaries35,000

Lease15,000

Depreciation15,000

Miscellaneous10,000

Totals75,000 &nbsp

Depreciationis a non-cash expense and therefore, it should not be included in thecash budget.

Theending cash balance is arrived at by subtracting the total paymentsfrom the total receipts plus the beginning cash balance.

Thatis, Ending cash balance = (Total receipts + beginning balance) –Total payments

Thecash budget reveals that Cyrus Brown’s business will have ashortfall of cash during March, April, May, June and September.Therefore, he needs to seek an outside source of funds to cater forthe total payments of these months.