From the information given below construct a cash budget for five months period starting form May 20X1 till September. MONTH AND YEAR PROJECTED SALES April 20X1 $ 140,000 May 20X1 130,000 June 20X1 90,000 July 20X1 65,000 August 20X1 84,000 September 20X1 95,000 October 20X1 160,000 November 20X1 200,000 December 20X1 240,000 January 20X2 190,000 Total payments 34,700 30,400 41,500 59,000 88,500 110,000 Additional information: a) Assume that minimum cash balance as $ 10,000 and same balance has to be maintained throughout the planning period. b) 100 % percent of sales are credit basis. 80 percent of the accounts receivables are collected in one month, 10 percent during the second month of sale, 5 percent during the second month of sale and remaining during the fourth month of sale.

First we find the monthly cash collections 80 % in the month of sales , 10% in the second month , 5% in the third and 5 % in the fourth . We have summed them up in the following table.

Sales Collections

MAY JUNE JULY AUGUST SEPT

Particulars

1st Month 104,000 72,000 52,000 67,000 76,000

Collections

2nd Month 14,000 13,000 9000 6500 8400

3rd Month 7000 6500 4500 3250

4th Month 7000 6500 4500

Total

Collections 118,000 92,000 74,500 84,500 92,150

Now we prepare the cash budget deducting payments from collections and maintaining beginning and ending balance.

Cash Budget

MAY JUNE JULY AUGUST SEPT

Particulars

Opening 10,000 10,000 10,000 10,000 10,000

Add Total

Collections 118,000 92,000 74,500 84,500 92,150

Less Closing 10,000 10,000 10,000 10,000 10,000

Less Payments34,700 30,400 41,500 59,000 88,500

Cash Surplus 83,300 61,600 33,000 25,500 3650