question archive Here are some important figures from the budget of Wise Corporation for the third quarter of 2020: August July $1,275,800 September $1,096,300 Credit sales $1,483,500 890,160 765,480 657,780 Credit purchases Cash disbursements Wages, taxes, and expenses 348,600 395,620 337,150 Interest 29
Here are some important figures from the budget of Wise Corporation for the third quarter of 2020: August July $1,275,800 September $1,096,300 Credit sales $1,483,500 890,160 765,480 657,780 Credit purchases Cash disbursements Wages, taxes, and expenses 348,600 395,620 337,150 Interest 29
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Here are some important figures from the budget of Wise Corporation for the third quarter of 2020: August July $1,275,800 September $1,096,300 Credit sales $1,483,500 890,160 765,480 657,780 Credit purchases Cash disbursements Wages, taxes, and expenses 348,600 395,620 337,150 Interest 29.900 29,900 29.900 Equipment 0 158.900 96.300 5% Credit sales collections Collected in month of sale 35% Collected month after sale 60% Never collected June credit sales $1,135,020 June credit purchases $ 681,012 Beginning cash balance $ 425,000 All credit purchases are paid in the following month after the purchase. a) Using the above information, prepare a cash budget for the company. (15 points) b) Describe the steps you follow in preparing a cash budget. (10 points)
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| Wise Corporation | |||
| Cash Budget For Third Quarter 2020 | |||
| Particulars | July | August | September |
| Opening Balance | 4,25,000 | 4,93,030 | 4,27,835 |
| Receipts | |||
| From Debtors | 11,27,542 | 12,84,705 | 12,73,805 |
| Total | 11,27,542 | 12,84,705 | 12,73,805 |
| Payments | |||
| Purchases | 6,81,012 | 7,65,480 | 8,90,160 |
| Wages taxes and expenses | 3,48,600 | 3,95,620 | 3,37,150 |
| Interest | 29,900 | 29,900 | 29,900 |
| Equipment | 1,58,900 | 96,300 | |
| Total | 10,59,512 | 13,49,900 | 13,53,510 |
| Closing Balance | 4,93,030 | 4,27,835 | 3,48,130 |
Receipts from Debtors
| Particulars | June | July | August | September |
| Credit Sales | 11,35,020 | 12,75,800 | 14,83,500 | 10,96,300 |
| Cash Collection | ||||
| 35% in the same month | 3,97,257 | 4,46,530 | 5,19,225 | 3,83,705 |
| 60% Next month | 6,81,012 | 7,65,480 | 8,90,100 | |
| Total Monthly Collections | 3,97,257 | 11,27,542 | 12,84,705 | 12,73,805 |
Steps To Prepare a Cash Budget.
1) Set a time period. It could be either monthly, quarterly, half yearly.
2) Record the total Cash receipts
3) Record the total Cash payments
4) Find the net Cash balance by subtracting total cash receipts and cash payments.
5) Record the Opening Cash Balance
6) Find out the closing cash balance for the period.
