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Find out more about cash budget format.
In this article, you will learn more about cash budget format.
Cash Budget Format
The cash budget is divided into four sections:
- Cash receipts: lists all cash inflows excluding cash received from financing
- Cash disbursem*nts: consists of all cash payments excluding repayments of principal and interest
- Cash excess or deficiency: determines if the company will need to borrow money or if it will be able to repay funds previously borrowed
- Financing: details the borrowings and repayments projected to take place during the budget period.
The Cash Budget
Assume the following information for Royal:
- Maintains a 16% open line of credit for $75,000.
- Maintains a minimum cash balance of $30,000.
- Borrows on the first day of the month and repays loans on the last day of the month.
- Pays a cash dividend of $49,000 in April.
- Purchases $143,700 of equipment in May and $48,300 in June (both paid in cash).
- Has an April 1st cash balance of $40,000.
Example
Over to you
Please take some time to review this exercise and when you are ready move on to the next step, where you will find a short quiz.
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