Tuesday, July 30, 2013

Instructions: How to Approach the Cash Budget


Cash in Bank on 5/01/12
Cash Receipts (Current Year Sales)
Cash Receipts (Prior Year Sales)
Other Cash Receipts
Insert comment to identify the nature of the other cash receipts
TOTAL CASH RECEIPTS
Cash Payments for Purchases
Other Cash Payments
Loan Repayment
TOTAL CASH PAYMENTS
Cash in Bank on 4/30/13

     This is an example of a Cash Budget Statement.

      Cash in Bank on 5/01/12
      This is the amount that is stated on your firm’s bank account statement on 5/01/12 which marks the beginning
      of a new fiscal year. If there are no transactions that have occurred as of that date, report the amount prior to
     May 1st. If your firm has multiple bank accounts, sum up the amounts on May 1st from the bank accounts.
     (Make sure to provide evidence of these numbers by sending a copy of the bank statements).
                 Common Mistakes
·         Reporting an amount that does not match the exact amount on 5/01/12.
·         For firms with multiple bank accounts: Incorrectly summing up amounts from different bank accounts.

        Cash Receipts (Current Year Sales)
        This is all the cash that has been received for the sale of a product or service for the year.

       Cash Receipts (Prior Year Sales)
       This is all the cash that has been received for the sale of a product or service from the previous year.

       Other Cash Receipts
       This is other cash that has been received through outside sources that are not sales.

       Insert comment to identify the nature of the Other Cash Receipts
       If your firm received Other Cash Receipts, your firm must explain the nature of these other cash receipts.
      Where is this amount coming from?

       Total Cash Receipts
       This is the total of all the cash receipts your firm reported. In order to confirm the accuracy of this total, it is
       important to connect this amount to the bank account statement. This can be confirmed through adding up all
       the amounts of deposits from the beginning of the fiscal year (May 1st) to the end of the fiscal year (April 30th).
                    Common Mistakes
·         Adding amounts from dates that are not as reported on the cash budget. (Make sure that the addition of the total cash receipts begins on the Cash in Bank amount of 5/01/12 that your firm reported and ends on the Cash in Bank amount of 4/30/13 that your firm reported.
·         Adding amounts that your firm reported for cash receipts, but NOT matching the sum of all the deposits. (This is an indication that the cash receipts that were reported are incorrect).
·         Firms with multiple bank accounts must include the deposits that occurred on ALL bank accounts regardless of how minimal the amounts are.


Cash Payments for Purchases
This is all the cash that has been paid to other firms for purchases.

Other Cash Payments
This is all the cash payments made that are not related to purchases from firms.

Loan Repayment
This is the sum of all the loan payments that have been made to VEC Lending. Make sure that all the loan payments amounts are payments made from May 1st to April 30th. Loan Payments made before or after those dates will be considered a loan repayment for the prior year or the next year so DO NOT make that mistake. To prevent that issue from occurring, make sure that loan payments are made EVERY month during the first week of that month.
                Tips
·         Be sure to use the loan payment table to report payments that were made each month. (If multiple payments were made during one month for payments that should have been made in other months, those are payments made for THAT month and not the other months that were missed. A missed payment will result in an accumulation of interest which will influence the balance of the loan. If your firm misses a payment, be sure to calculate the interest that resulted due to the miss payment and add it to the payment).
·         For new firms: Make sure to make a monthly payment the month that your firm receives the loan. The repayment of the loan begins the month that your firm receives the loan.

Loan Payment Table
2012-2013
Report Date
Beginning Balance
Interest
Adjusted Balance
Payment
End Balance
1-May-12
 $                     -  
 $            -  
 $                   -  
 $           -  
 $              -  
1-Jun-12
 $                     -  
 $            -  
 $                   -  
 $           -  
 $              -  
1-Jul-12
 $                     -  
 $            -  
 $                   -  
 $           -  
 $              -  
1-Aug-12
 $                     -  
 $            -  
 $                   -  
 $           -  
 $              -  
1-Sep-12
 $                     -  
 $            -  
 $                   -  
 $           -  
 $              -  
1-Oct-12
 $                     -  
 $            -  
 $                   -  
 $           -  
 $              -  
1-Nov-12
 $        350,000.00
 $  1,385.42
 $      351,385.42
 $  6,500.68
 $ 344,884.74
1-Dec-12
 $        344,884.74
 $  1,365.17
 $      346,249.91
 $  6,500.68
 $ 339,749.23
1-Jan-13
 $        339,749.23
 $  1,344.84
 $      341,094.07
 $  6,500.68
 $ 334,593.39
1-Feb-13
 $        334,593.39
 $  1,324.43
 $      335,917.82
 $  6,500.68
 $ 329,417.14
1-Mar-13
 $        329,417.14
 $  1,303.94
 $      330,721.08
 $  6,500.68
 $ 324,220.40
1-Apr-13
 $        324,220.40
 $  1,283.37
 $      325,503.77
 $  6,500.68
 $ 319,003.09
Total

 $  8,007.17

 $39,004.08
 $ 319,003.09

This is an example of a loan payment table that has made consistent monthly payments.

Loan Payment Table      
2012-2013
Report Date
Beginning Balance
Interest
Adjusted Balance
Payment
End Balance
1-May-12
 $                     -  
 $            -  
 $                   -  
 $           -  
 $              -  
1-Jun-12
 $                     -  
 $            -  
 $                   -  
 $           -  
 $              -  
1-Jul-12
 $                     -  
 $            -  
 $                   -  
 $           -  
 $              -  
1-Aug-12
 $                     -  
 $            -  
 $                   -  
 $           -  
 $              -  
1-Sep-12
 $                     -  
 $            -  
 $                   -  
 $           -  
 $              -  
1-Oct-12
 $                     -  
 $            -  
 $                   -  
 $           -  
 $              -  
1-Nov-12
 $        350,000.00
 $  1,385.42
 $      351,385.42
 $  6,500.68
 $ 344,884.74
1-Dec-12
 $        344,884.74
 $  1,365.17
 $      346,249.91
 $  6,500.68
 $ 339,749.23
1-Jan-13
 $        339,749.23
 $  1,344.84
 $      341,094.07
 $           -  
 $ 341,094.07
1-Feb-13
 $        341,094.07
 $  1,350.16
 $      342,444.23
 $ 13,001.36
 $ 329,442.87
1-Mar-13
 $        329,442.87
 $  1,304.04
 $      330,746.91
 $  6,500.68
 $ 324,246.23
1-Apr-13
 $        324,246.23
 $  1,283.47
 $      325,529.71
 $  6,500.68
 $ 319,029.03
Total

 $  8,033.11

 $39,004.08
 $ 319,029.03

This is the same loan, but one missed payment in January resulted in a different end balance and interest although two payments in February were made to account for the missed payment. This also generated a new interest amount, so firms must be sure to pay off the extra interest accumulated in order to pay off the loan in five years. (To prevent any miscalculations from occurring, it is better to continuously send payments EVERY month).

        Total Cash Payments
        This is the total of all the cash payments your firm reported. In order to confirm the accuracy of this total, it is
        important to connect this amount to the bank account statement. This can be confirmed through adding up
        all the amounts of withdrawals from the beginning of the fiscal year (May 1st) to the end of the fiscal year
        (April 30th).
                     Common Mistakes
·         Adding amounts from dates that are not as reported on the cash budget. (Make sure that the addition of the total cash payments begins on the Cash in Bank amount of 5/01/12 that your firm reported and ends on the Cash in Bank amount of 4/30/13 that your firm reported.
·         Adding amounts that your firm reported for cash payments, but NOT matching the sum of all the withdrawals. (This is an indication that the cash payments reported are incorrect).
·         Firms with multiple bank accounts must include the withdrawals that occurred on ALL bank accounts regardless of how minimal the amounts are.

          Cash in Bank on 4/30/13
         This is the amount that is stated on your firm’s bank account statement on 4/30/13 which marks the end of a
         fiscal year. If there are no transactions that have occurred as of that date, report the amount prior to April
         30th. If your firm has multiple bank accounts, sum up the amounts on April 30th from the bank accounts.
         (Make sure to provide evidence of these numbers by sending a copy of the bank statements).
                      Common Mistakes
·         Reporting an amount that does not match the exact amount on 4/30/13.

·         For firms with multiple bank accounts: Incorrectly summing up amounts from different bank accounts.

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