Workshop Budget Example 2 The following information is available from the financial records of Berwick Ltd: Sales$ Purchases :9 105 000 120,000 90,000 135,000 Receipts from customers are normally 60 per cent in the month of sale, 30 per cent in the month following the sale, and 8 per cent in the second month following the sale. The balance is expected to be uncollectable. Berwick takes full advantage of the 2 per cent discount allowed on purchases paid for by the 10th day of the following month. Workshop - Budget Example 2 - Purchases for August are budgeted at $300 000, and sales for August are forecast at $330 000. - Cash payments for expenses are expected to be $72 000 for the month of August. - Berwick's cash balance on 1 August was $110 000. Required: - Prepare a cash budget for Berwick for August that includes: 1. Expected cash receipts during August. 2. Expected cash payments during August. 3. Expected cash balance on 31 August. Workshop - Budget Example 2 Solution April May June July August Cash in 108,000 54,000 14,400 99,000 49,500 13,200 90,000 45,000 12,000 117,000 58,500 198,000 Total CI 268,500 Cash out 132,300 Expenses 72,000 Total CO 204,300 Cash Budget 110,000 CI 268,500 CO -204,300 174,200