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FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

The following information is extracted from Sosana Hotel’s management report for the
month of January 2022.
RM
Beginning cash balance 8,200
Budgeted revenue 13,000
Purchase of inventory by cash 4,500
Cash repayment of bank loan 5,800
Additional information, 70% of Sosana Hotel’s revenue is received in cash and the
remaining 30% on credit. All credit sales are expected to be collected in the following
month. Assume that there were no credit sales and credit purchases in December 2021.
Based on the given information, prepare a cash budget for the month ended 31st January
2022 to calculate ending cash balance

Definition Definition Estimate of an organization's cash flow for a future period. A cash budget forecasts future cash receipts and payments from various sources for a fiscal year. A cash budget can be created once a month or once a week to determine the organization's cash position and ensure its performance in relation to the budget. It aids in determining whether the company has enough cash and cash equivalents to meet its operational needs in the future.

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