Cash Budgeting

Objective of this Assignment:

In this assignment, students will demonstrate the business planning skills by creating a cash budget.

Pre-Assignment Instructions:

To prepare you for this assignment, read the module 5 content, review all additional resources provided and complete the learning activity 5.1.

Assignment Tasks:

For this assignment, you will read the following scenario and familiarize yourself with Bluepanda Inc.s finances. Once you have a good understanding of the financial undertakings, use the information provided in the scenario to complete the cash budgeting tasks below:

Bluepanda Inc. sales electronics parts, which finds application in various equipment used mainly in construction industry. The company has faced some issues in managing its working capital and has lost some key suppliers in the recent past due to mismanagement of cash and delay in vendor payments. Bluepanda has hired you as a financial consultant to look into this matter and provide a comprehensive perspective. The management also desired to maintain a cash balance of more than $15,000 each month as financial prudence.

After considering all the information provided to you, you decided that having a cash budget would be the first step to understand the shortfall/surplus of cash and will aid in working capital management. You arranged a meeting with the marketing team and gathered the following information:

Sales Forecast

Month- year	Sales
Nov. 2022	$50,000
Dec 2022	$60,000
Jan 2023	$60,000
Feb 2023	$70,000
March 2023	$75,000
April 2023	$80,000

The accounts management team provided the following information:

80% of revenue is on a cash basis.

20% is collected after 30 days.

Cost of sales, which is 50% of revenue, is incurred in the month in which the sales are made.

These goods are paid for 30 (1 month) days after the purchases are made.

Monthly selling and administrative expenses are as follows:

Wages	$12,000
Financing Cost	$2,500
Rental Cost	$800
Depreciation	$3,000
Communication and Promotion expense	$1,000
Provision for future losses	$2,000

Other budgeted expenses are as follows:

Taxes: $10,000 in February, $10,000 in April, and $10,000 in September

Purchase of assets: $3,000 in January, $12,000 in February, $20,000 in March, and $3,000 in April

Cash balance on January 1, 2023, is $3,000

Use the above information to complete the following tasks and shows step by step calculations

1- Prepare a cash budget for the months of January 2022, February 2022, March 2022 and April 2022.

2- Based on the cash budget, provide recommendation to the management of Bluepanda on cash management and any suggestions to improve cash management.

3- Provide comments on their ability to maintain the desired cash balance of $15,000 each month.