Chapter 40
Managerial Accounting
Cash Budgets
Prepared by Diane Tanner
University of North Florida
Cash Budget
 A VERY important budget
 Involves the planning and timing of cash flows
 A necessary supplement to the budgeted
income statement
 Why?
Cash inflows
and outflows
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=
Revenues and expenses
I.e., accrual-based income
statement
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Sources of Cash Inflows/Outflows
 All cash inflows are cash receipts
 Payments from customers
 Interest income received
 All cash outflows are cash disbursements
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

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Payments for inventory purchases
Payments for operating expenses
Payments for capital expenditures
Payments for dividends
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Cash Budget Formats
 Cash receipts budget
 Includes only cash inflows
 Cash disbursements budget
 Includes only cash outflows
 Complete cash budget
 Detailed format
 Lists cash inflows, cash outflows, and beginning and
ending cash balances
 Summary format
 A single total for cash receipts and a single total for
cash disbursements
 Shows beginning balance plus cash receipts less cash
disbursements and often financing required to achieve
a minimum cash balance
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Cash Receipts Budget Example
Cynedyne estimates it will collect 24% of its sales during the month of
sale, 56% in the month after the sale, and 19% in the second month
following the sale. 1% is estimated to be uncollectible. Projected sales
are:
Projected sales revenue
April
$230,000
May
$220,000
June
$287,000
July
$261,000
August
$255,000
Prepare a cash receipts budget in good form for June.
$287,000 x 24%
Cash to be received during June from:
June sales
$68,880
$220,000 x 56%
May sales
123,200
$230,000 x 19%
April sales
43,700
Budgeted cash receipts
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$235,780
Cash Disbursements Budget Example
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Cynedyne, Inc. provided the following budget information for the next five months:
April
May
June
July
August
Projected purchases
$79,000
$95,000
$89,000
$78,000
$82,000
Budgeted income tax expense
28,000
24,000
26,000
25,000
24,000
• Inventory purchases: Paid 30% in the month purchased; 70% in the following month.
• Operating expenses are budgeted at $91,000 in May, with an increase by $1,500 per month.
Included in the monthly amount is depreciation of $4,200.
• Operating expenses are paid 40% in the month incurred and 60% in the next month.
• The company make a monthly note payment for $2,850, of which $150 is interest.
• Cynedyne pays income taxes during the month after accrual.
Prepare a cash disbursements budget in good form for June.
Cash to be paid for June purchases (30% x $89,000)
Cash to be paid for May purchases (70% x $95,000)
Cash to be paid for June operating ($92,500 - $4,200) x 40%
Cash to be paid for May operating ($91,000 - $4,200) x 60%
Cash to be paid for note and interest
Cash to be paid for income taxes
Budgeted cash disbursements
$26,700
66,500
35,320
52,080
2,850
24,000
$207,450
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Summary Cash Budget Example
Ceredyne has a budgeted June 1 cash balance of $16,000.
Total budgeted cash receipts are $235,780. Total budgeted
cash disbursements are $207,450. Prepare a summary cash
budget for June.
Budgeted beginning cash balance
Add budgeted cash receipts
Less budgeted cash disbursements
Budgeted ending cash balance
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$ 16,000
235,780
(207,450)
$ 44,330
The End
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