Deficiency if cash available cash needs Requires the need for a short term loan

# Deficiency if cash available cash needs requires the

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Deficiency if cash available < cash needs: Requires the need for a short-term loan or overdraft Excess if cash available > cash needs: Repay loans or make temporary investments Discloses principal ” planned borrowings and any planned repayments; interest ” payments; bank overdraft (balance can go “ negative up to a certain limit”) Opening Cash Balance + Cash Collections - Cash Disbursements = Excess or Deficient Cash + / - Financing Activity = Ending Cash Balance 30
Student Task – Cash Receipts Jonathon Pty Ltd makes all sales on credit. Typically 30% is collected in the same month of when the sale is made; the remaining 70% is collected in the month following the sale. The business opening balance for accounts receivable is \$60,000. It has the following sales budget for the first six months of the financial year commencing on 1 July 2019. Calculate the Cash Receipts for the 3 months ended 30th September 2019 \$ July 100,000 August 120,000 September 110,000 October 130,000 November 120,000 December 80,000 31
Student Task – Cash Receipt Projections Cash Receipts July \$ August \$ September \$ Quarter Total \$ Month of sale Following month Total budgeted cash receipts 32
Student Task – Cash Payments Jonathon's cost of goods sold amount is 65 per cent of sales revenue. Payment to suppliers is equal to the amount of cost of goods sold. Jonathon has monthly fixed costs of rent \$5,000 insurance \$3,000 & wages \$2,000 as well as \$4,000 of depreciation charges. Fixed costs are paid in the month in which they are incurred. In addition, Jonathon pays a 7 per cent commission on sales and this is paid in the month following the month in which it is earned. The sales commissions accrued but unpaid at 30 June 2019 amounted to \$7,000. Calculate the Cash Payments for the 3 months ended 30th September 2019. 33
Student Task – Cash Payment Projections Cash Payments Budget July \$ August \$ September \$ Total \$ Payment to Inventory Suppliers Payment of Rent Payment of Insurance Payment of Wages Payment of Sales Commission Total budgeted cash payments 34
Student Task – Cash Budget The cash receipt and cash payment budgets are brought together in the cash budget . This plan shows the net cash flow. Net cash flow = budgeted cash receipts – budgeted cash payments The impact of the net cash flow on cash at bank balances can be established. Jonathon Pty Ltd's Cash Budget can now be prepared with following additional information: - The opening cash balance is \$5,000 & - Interest of 12% is received or paid based on the closing excess/deficit Calculate the Cash Budget for the 3 months ended 30th September 2019. 35
Student Task Cash Budget Cash Budget for 1 st Qtr Sept’19 July \$ August \$ Septemb er \$ Qtr Total \$ Opening Cash Balance Add: Cash Receipts *see earlier slides Less: Cash Payments *see earlier slides Excess (Deficit) Cash 12% Interest received Closing Cash Balance 36
Revision Question/Case Study 5 To be discussed at the beginning of Topic 6 seminar (Solution to this question will NOT be provided on CloudDeakin – Please attempt this question and attend the seminar / listen to the online recording) Mystery as Mint loses nearly \$1 million to 'unauthorised payments‘ By Primrose Riordan Jan 23, 2017, Financial Review The Royal Australian Mint lost nearly \$1 million after four "unauthorised payments" were made by an employee through the agency's online banking portal last year.

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