g The beginning cash balance is $15,000. Sales are forecasted at $800,000 of which 80% will be on credit. 70% of credit sales are expected to be collected in the year of sale. Cash expenditures for the year are forecasted at $475,000. Accounts Receivable from previous accounting periods totaling $9,000 will be collected in the current year. The company is required to make a $15,000 loan payment and an annual interest payment on the last day of every year. The loan balance as of the beginning of the year is $90,000, and the annual interest rate is 10%. Compute the excess of cash receipts over cash disbursements.

Excess of cash receipts over cash disbursements is $118,000.

Explanation:

The excess of cash receipts over cash disbursements in a cash budget refers to the amount by which the total cash received is greater than the total cash payments made by a company in a particular period.

The excess of cash receipts over cash disbursements is obtained by deducting the total cash payments from the total cash received, and this can be obtained fo this question as follows:

Cash Budget

Particulars                                                         $                       $        

Cash Receipts:

Cash sales (w.1)                                          160,000

Cash received from credit sales (w.2)      448,000

Accounts receivable                                    9,000  

Total cash receipts (A)                                                           617,000

Cash Disbursement:

Cash expenditures                                  (475,000)

Loan repayment                                         (15,000)

Interest on loan (w.3)                                 (9,000)    

Total cash disbursement (B)                                                 (499,000)    

Excess of cash receipts over

cash disbursements (C = A - B)                                             118,000

Beginning cash balance                                                          15,000  

Ending cash balance                                                              133,000  

Therefore, excess of cash receipts over cash disbursements is $118,000.

Workings

w.1: Cash sales =$800,000 * (100% - 80%) = $800,000 * 20% = $16,000

w.2: Cash received from credit sales = $800,000 * 80% * 70% = $448,000

w.3: Interest on loan = $90,000 * 10% = $9,000

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