Page 410 - Business Principles and Management

Chapter 15 • Business Financial Records

FIGURE 15-3 A Cash Budget

Cash Budget—for Three Months Ending March 31, 20--

JANUARY FEBRUARY MARCH

NET SALES $ 80,000 $ 80,000 $ 80,000
Beginning cash balance 33,500 4,000 7,000

Collections from customers 70,000 70,000 80,000
Total cash available $103,500 $74,000 $87,000
Payments
Accounts to be paid 45,000 45,000 60,000
Labor 9,500 12,000 16,000
Salaries and administrative
expense 7,000 7,000 7,000
Sales expense 15,000 15,000 15,000

Other operating expenses 13,000 18,000 24,000

Purchase of fixed assets 10,000 10,000
Repayment of bank loan 10,000
Total cash payments $ 99,500 $107,000 $132,000
Expected cash shortage 33,000 45,000
Bank loans needed 40,000 50,000
Ending cash balance 4,000 7,000 5,000
End-of-month situation:

Materials purchased $ 45,000 $ 60,000 $ 80,000
Accounts receivable 150,000 160,000 170,000
Accounts payable 45,000 60,000 80,000
Bank loans 40,000 90,000

a large expenditure. The manager must plan well in advance if the money is to be
available when the trucks are needed. Assume that the company buys the trucks
based on a forecast that future sales will justify their need. However, if sales do
not increase as expected, profits will be lower as a result of the added costs related
to the purchase.

SALES BUDGET The sales budget is a forecast of the sales revenue a company expects
to receive in a month, a quarter (three months), or a year. Estimated sales are

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