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Cash Budget Template

SCHEDULE OF EXPECTED CASH COLLECTIONS FROM CUSTOMERS:
Credit Sales		May	June
April		65,800
May		26,850	62,650
June			22,500
Total Cash Collections		92,650	85,150
SCHEDULE FOR EXPECTED PAYMENTS FOR PURCHASE OF INVENTORY
Inventory purchases		May	June
April		117,000
May		54,000	81,000
June			25,200
Total Payments for Inventory Purchases		171,000	106,200
	LBJ Company
	Cash Budget
	For the Two Months of May and June
		May	June
Cash balance		$20,000	$24,500
Add: Receipts
Collections from customers		92,650	85,150
Sale of plant assets		33,000
Sale of new common stock			50,000
Cash sales		75,000	57,000
Total receipts		200,650	192,150
Total Available Cash		220,650	216,650
Less: Disbursements
Purchases of inventory		171,000	106,200
Operating expenses		15,000	15,000
Selling and administrative expenses		10,150	10,150
Equipment purchase			19,000
Dividend			20,000
Total disbursements		196,150	170,350
Excess (deficiency of available cash over disbursements)		24,500	46,300
Financing
Borrowings		- 0
Repayments			- 0
Ending cash balance		$24,500	46,300

Qualitative Questions

1)	What are the three sections of a Cash Budget, and what is included in each section?
	The three sections are:
	1) Cash receipt section – It includes cash received by the company from customers, any inetrest earned or dividend received and from any sale proceeds of plant assets.
	2) Cash disbursement section – It includes payment of cash by the company for inventory, for dividend and for any other expenses.
	3) Financing section – It includes borrowing and repayment of the borrowing along with inetrest by the company
2)	Why is a Cash Budget so vital to a company?
	Cash budget is ver important since it provides an estimation of cash outflow and inflow over a period of time and will report excess or shortfall of
	cash. Cash is needed by the company to meet its day to day requirements. If the company doesnot maintain cash budget, it will create problem for
	the company. It helpful in analyzing the requirement and source of cash.
3)	What are the five basic principles of cash management that a company can follow in order to improve its chances of having adequate cash?
	1) Reducing cash collection period which will results in quicker collection of cash.
	2) Increasing payable period, so that available cash can be used for immediate gains. But delaying payment should be done in carefull way, so
	that company credit rating should not get affected.
	3) Maintaining optimum inventory level will result in good cash management.
	4) Major capital expenditures should be planned in advance
	5) Cash should not be kept idle. It will loses its value, so any excess cash should be invested in any short or long term plan.