The cash budget is composed of four major sections:
1. The receipts section.
2. The disbursements section
3. The cash excess or deficiency section.
4. The financing section.
The receipts section lists all of the cash inflows, except from financing, expected during the budget period. Generally, the major source of receipts is from sales.
The disbursements section summarizes all cash payments that are planned for the budget period. These payments include raw materials purchases, direct labor payments, manufacturing overhead costs, and so on, as contained in their respective budgets. In addition, other cash disbursements such as equipment purchases and dividends are listed.
My cash excess section was computed as follows:
If a cash deficiency exists during any budget period, the company will need to borrow funds. If there is a cash excess during any budget period, funds borrowed in previous periods can be repaid or the excess funds can be invested.
The financing section details the borrowings and repayments projected to take place during the budget period. It also lists interest payments that will be due on money borrowed.
The cash balances at both the beginning and end of the year may be adequate even though a serious cash deficit occurs at some point during the year. Consequently, the cash budget should be broken down into time periods that are short enough to capture major fluctuations in cash balances.
Your tutorial is attached and it has a complete budget (ignoring all student entries in the submission). Click in cells to see computations.