
Concept explainers
Concept Introduction:
A budget is prepared to know the estimates related to a particular item. There can be
A cash budget is an estimate of expected cash receipts and cash payments and the excess cash available with the business.
To prepare:
Cash budget for Gado Company for the Month ended on March 31.

Answer to Problem 24QS
Solution:
Cash budget for Gado Company for the Month ended on March 31 is prepared as under −
Gado Company | ||
Cash Budget | ||
For the Month Ended March 31 | ||
Beginning cash balance | 72,000 | |
Cash receipts from sales | 300000 | |
Total cash available | 3,72,000 | |
Cash Disbursements | ||
Payment for purchases | 1,40,000 | |
Salaries | 80,000 | |
Other expenses | 45,000 | |
Repayment of bank loan | 20,000 | |
Total cash disbursements | 2,85,000 | |
Ending cash balance (Excess of cash available over cash disbursements) | 87,000 |
Explanation of Solution
The preparation of cash budget can be explained as under.
A cash budget is an estimated summary of cash available and cash disbursement and then excess of cash available over cash disbursements or deficiency of cash available over cash disbursements will be calculated.
A cash budget is divided into three parts −
- Total cash available
- Total cash disbursements
- Ending cash balance (Can be excess as well as deficiency)
- The total cash available is calculated as under −
Given,
- Beginning cash balance = $ 72,000
- Cash receipts from sales = $ 300,000
Thus, total cash available = $ 372,000.
- The total cash disbursements are calculated as under − Total cash disbursements = Budgeted cash payments for direct materials + Budgeted cash payments for direct labor + Other budgeted cash expenses + Cash repayment of bank loan
Thus, total cash disbursements = $ 285,000.
- Ending cash balance (Can be excess as well as deficiency)
Given,
- Total cash available = $ 372,000
- Total cash disbursements = $ 285,000
Thus, the ending balance of cash = $ 87,000.
Thus, the cash budget for Gado Company for the month March has been prepared.
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Chapter 22 Solutions
Loose Leaf For Fundamental Accounting Principles Format: Loose-leaf
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