[Louiezmum]

Q 1: How do I account for purchases being 15% of each month's sales and are paid for in the month after purchase. I can account for the 15% etc but how do I put the month after purchase in the monthly cash budget?
Q 2: If new equipment (for the business) is purchased in June 2009 for $60,000 and the firm pays a $20,000 deposit, the balance being financed by a loan - how do I put this into the budget?

Any replies gratefully received.

[morgaine300]

Q1. Make columns for the months. List the sales for each month. Figure the 15% of the next month and put the purchase in this month. (i.e. 15% of June sales is May's purchases.) But, then it's not paid for until next month. (Meaning it's back to June.) So you stick that under June's column under the expenditures.

Part of the trick is that you need to have a piece of scrap paper so that you can do stuff like writing down the sales (which presumably aren't collected in the same month), and the purchases, versus when the cash would actually happen. You need those extra figures. THEN transfer the actual cash number into the budget itself. The calculations you did to get them can be a footnote or on another schedule, if required.

Q2. The deposit goes into June when they paid it. I don't know the terms of the sale, but all the payments go wherever they would be paid.

Just take this stuff literally. Look at what cash happens and when it happens.