Cash Budgeting Mairead Maguire provides the following information at the end of May 2013 - Leaving Cert Accounting - Question 9 - 2013

To create the Cash Budget, we will organize the data into receipts and payments for each month. This includes sales from debtors, cash from purchases, and expenses.

Receipts

• Debtors: The cash received from sales is recognized as follows:
  • June: Receivables from April sales (€94,000)
  • July: Receivables from May sales (€86,000)
  • August: Receivables from June sales (€73,400)
  • September: Receivables from July sales (€65,000)
  • October: Receivables from August sales (€69,300)

The total receipts for each month will be the sum of all cash from debtors for that month.

Payments

• Cash for Purchases: Payments for cash and credit purchases:

  • June: €0
  • July: €8,000 (cash purchase) + (€0 for previous month)
  • August: €27,800
  • September: €34,300
  • October: €41,900

• Expenses: Expenses incurred, paid in the same month.

• Rent: €1,200 is paid for June through August, then €1,300 for September.

The total payments per month will therefore consist of cash for purchases, expenses, and rent. Finally, we will aggregate total receipts and total payments, calculate net cash for each month, and determine the closing cash balance for each month:

• Net Cash: Net cash will be calculated as: [ \text{Net Cash} = \text{Total Receipts} - \text{Total Payments} ]
• Closing Cash: Closing cash will be calculated as: [ \text{Closing Cash} = \text{Opening Cash} + \text{Net Cash} ]

This structured framework will allow the successful computation of the Cash Budget.