[sana_moin]

Is there any specific formula for calculating the figures for "repayment of loan" while making a cash budget?

On what basis is the calculation done?

Note: it comes under the Financing section of cash budget...
Borrowings xxx
Repayment xxx
Interest payment xxx

I know how to calculate "borrowings"... how to calculate repayments?
Plzz help!

For example...
Minimum cash balance required is 15,000
Cash can be borrowed or repaid in multiples of 500 at an interest of 10% p.a.

And following is the cash budget:-
For Quarter 1:-
Total cash available is 135,000
Total cash payments is 140,000

For Quarter 2:-
Total cash available is 165,000
Total cash payments is 150,000

For Quarter3:-

Total cash available is 175,000
Total cash payments is 150,000

For Quarter 4:-
Total cash available is 236,325
Total cash payments is 180,400

Now how do you calculate the "Repayment of loans"?
Please do let me know if I am missing out on any important information so that I can provide you with it...
This is really confusing to me... plzz clear my doubt!

[Just Looking]

Do you have a beginning cash balance? Do you have a beginning loan payable?

As an example, in Qtr 1, you have a deficiency of $5,000. You may have a beginning cash balance that will cover that or you may need to borrow funds. In Qtr 2, you have an excess of $15,000. Depending on those beginning balances and what happened in Qtr 1, you may be able to pay back some of the $5000 (or portion thereof) that you borrowed, remembering you need to keep $15,000 as a cash balance. Qtr 3 has a $15,000 excess that you will be able to use at least in part to pay off loans - depending on those beginning balances.

When you do pay any loans, you have to calculate the interest at 10% of the balance pro-rated for the part of the year the funds were outstanding. The remainder of cash available will go against principal. The total amount will be deducted from cash on your budget, so you can then calculate what happens in Qtr 4.

[sana_moin]

Okay let me draw it out to you...

Particulars:-Q1/Q2/Q3/Q4
Opening balance:- 10,000/15,000/15,000/15,325
Cash receipts:-125,000/150,000/160,000/221,000
TOTAL CASH AVAIALBLE(A):-135,000/165,000/175,000/236,325

TOTAL CASH PAYMENTS(B):-140,000/150,000/150,000/180,400

MINIMUM CASH BALANACE REQUIRED:-15,000/15,000/15,000/15,000

TOTAL CASH REQUIRED:-155,000/165,000/165,000/195,400

EXCESS/DEFICIT:-(20,000)/- /10,000/40,925

FINANCING:-
Borrwing:- 20,000/- /- /-
Repayment:- - / - / (9000)/ (11,000)
Interest payment:- - / - / (675)/(1,100)

TOTAL EFFECT OF FINANCING(C):- 20,000/ - / (9675)/(12,100)

CASH BALANCE AT END(A-B+C):- 15,000/15,000/15,325/43,825


Now my doubt is how did u get (9000) and (11,000) in Q3 n Q4 as REPAYMENTS?

[sana_moin]

Hey thanks for answering... but please can you check out the next comment/answer.. the one after yours... I entered in some details of the cash budget... maybe you could use it to explain me?!

[Just Looking]

I'm wondering where you got the numbers for the interest. Unless there is more info given, I came out with a different amount, as follows. You know you have $10,000 available to repay the loan and interest in Qtr 3. First you have to compute the interest. It is 10% per annum and you had it for 2 quarters, or 1/2 a year. The calculation would be $20,000 * .10 * 1/2 = $1,000. That leaves $9,000 available for repaying the loan. This also leaves you with $15,000 (not $15,325) in your cash balance.

You now have a balance of $11,000 due for the loan ($20,000 - 9,000 repaid). Qtr 4 has such an excess of cash that you are able to pay the remaining $11,000. You now need to compute the interest due. You have paid interest up through Qtr 3 already, so you only owe it for one quarter of a year. You will only owe interest on $11,000 * .10 * 1/4 = 275 Your total payment would be $275 + 11,000 = $11,275. The loan balance is now zero.

[sana_moin]

Thankkk you so much!!
I understood it all now!
God bless!

[Phillip Bell]

9. Calculating Cash Collections The following is the sales budget for Shleifer, Inc. for the first quarter of 2010:
January February March
Sales budget $173,000 $184,000 $205,000
Credit sales are collected as follows:
65 percent in the month of the sale.
20 percent in the month after the sale.
15 percent in the second month after the sale.