Ad The cash budget is considered the primary forecasting tool when firms try to estimate their cash flows and figure out if they are likely to need additional

Ad The cash budget is considered the primary forecasting tool when firms try to estimate their cash flows and

 

 

 

answer:

Particulars Q1 Q2 Q3 Q4
Purchases (80% next quarter) 1384 1424 1264 1464
CASH BUDGET Q1 Q2 Q3 Q4
Cash Collections 1430 1480 1530 1530
CASH PAYMENTS
Purchase payments 1384 1424 1264 1464
Wages, supplies and taxes 15% of next period sales 260 267 237 275
Expansion 0 0 $1080 0
Interest and dividend $60 $60 $60 $60
Total payment 1704 1751 2641 1799
Net cash position -274 -271 -1111 -269
Beginning cash flows 40 -234 -505 -1616
Cum Cash -234 -505 -1616 -1885
Minimum cash balance $16 $16 $16 $16
Surplus or borrowing -240 -521 -1632 -1901

1.

Particulars Q2
Purchases (80% next quarter)

1.

1424
CASH BUDGET Q2
Cash Collections 1480
CASH PAYMENTS
Purchase payments 1424
Wages, supplies and taxes 15% of next period sales 267
Expansion 0
Interest and dividend $60
Total payment 1751
Net cash position -271
Beginning cash flows -234
Cum Cash -505
Minimum cash balance $16
Surplus or borrowing -521

2.

Particulars Q4
Purchases (80% next quarter) 1464
CASH BUDGET Q4
Cash Collections 1530
CASH PAYMENTS
Purchase payments 1464
Wages, supplies and taxes 15% of next period sales 275
Expansion 0
Interest and dividend $60
Total payment 1799
Net cash position -269
Beginning cash flows -1616
Cum Cash -1885
Minimum cash balance $16
Surplus or borrowing 1901

3. maximum investable funds

Surplus or borrowing -240 -521 -1632 -1901

4. No, Income statement and cash budget are not exactly the same.

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