9 33 Am Thu Mar 3 Lte 4bn Club Com Consider The Following Cash Budgeting Example For Buckeye Pharmaceutical Company Gro 1 (42.34 KiB) Viewed 42 times
9 33 Am Thu Mar 3 Lte 4bn Club Com Consider The Following Cash Budgeting Example For Buckeye Pharmaceutical Company Gro 2 (46.04 KiB) Viewed 42 times
9:33 AM Thu Mar 3 LTE 4BN club.com Consider the following cash budgeting example for Buckeye Pharmaceutical Company: Gross Sales by month • May 2010: $5,000 • June: $5,000 • July: $10.000 • August: $15,000 • September: $20,000 • October: $10,000 . November: $10,000 • December: $5,000 • January 2011: $10,000 After referring to the information provided, prepare a cash budget for the company for the period July to December 2010. All dollar amounts are in thousands. All sales transactions are on credit, with historical data showing that 30% of current revenues are collected in the current month, 50% in the next month and 20% in the second month after sale. Assume that bad debt is negligible. Except for supplies, assume that operating expenses are paid during the month they are incurred. Operating expenses (monthly unless indicated otherwise) for the period are as follows: • Wages and salaries: $750 • Insurance: $250 Depreciation: $300 • Other expenses: $3,000 • Taxes (paid in Sep. and Dec.): $500 Payment for capital equipment in Oct.: $1,000 Supplies purchases in a month must equal 70% of the projected gross sales for the following month, Supplies are paid for in the month after purchase. The corporation must maintain an ending cash balance of $3,500 each month and meets a cash shortfall through a short-term loan. fignore interest for purposes of this example.) For simplicity in this example, assume that excess cash remains as cash (le, is not reinvested). Assume that at the beginning of July, the company had a cash balance of $3,500 with no short-term loan outstanding. Use the provided template.
Cash Budget July to December 2010 May June July Aug Sep Nov Dec 11-Jan 80 OUAWN 6 Collections and Purchases Worksheet 7 1. Gross Sales 8 2. Collections a. During month of sale 10 b. First month after sale 11 c. Second month after sale 12 3. Total Collections 13 14 4. Purchases (% of next month's sales) 15 5. Payments for Purchases 16 17 Cash Gains or losses 18 6. Total collections 19 7. Purchases 20 8. Wages and salaries 21 9. Rent 22 10. Other expenses 23 11. Taxes 24 12. Payment for capital assets 25 13. Total payments 26 14. Net cash gain (loss) 27 28 Cash Surplus (Loan Requirement) 29 15. Cash at beginning with no borrowing 30 16. Collective case 31 17. Target cash balance (month end) 32 18. Cumulative case surplus (loan balance) 33
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