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ACTIVITY 1: Read, analyze and solve the problem. Write your answers in your notebook. Show your solutions.

Problem Solvihe

Gerry Jacobs, a financial analyst for Best Value Supermarkets, has prepared the following sales and cash disbursement estimates for the period of August through December of the current year.

Manth

Soles

Cash Disbursements

August

P400

P300

500

September

October

400

November

600

500

December

700

90% of sales are for cash, the remaining 10% are collected one month later. All disbursements are on a cash basis. The firm wishes to maintain a minimum rash balance of P50. The beginning cash balance in September is P25. Prepare a cach brudget for the months of October, November, and December, muting any needed financing or excess cash available.activity 1 
filled-in cash budget for Best Value Supermarket. It is for the months of October, November, and December. The budget includes the following items:
 
- Cash Receipts
- Less: Cash Disbursements
- Net Cash Flows
- Add: Beginning Balance
- Ending Cash Balance
- Less: Minimum Cash Balance
- Cumulative Excess Cash Balance
show me a correct statement

I can assist with extracting and solving the cash budget problem from the image you've provided. Based on the content visible in the image, the problem involves creating a cash budget for Best Value Supermarkets from October to December. Here's how I would approach it:

### Problem Breakdown:
1. **Sales Estimates**:
   - August: P400
   - September: P500
   - October: P400
   - November: P600
   - December: P700

2. **Cash Disbursements**:
   - August: P300
   - September: (Not visible in the image)
   - October: P500
   - November: P500
   - December: (Not visible, possibly another P500)

3. **Cash Collection Rules**:
   - 90% of sales are collected in cash during the same month.
   - 10% of sales are collected in the following month.

4. **Beginning Cash Balance**: 
   - Starting in September: P25

5. **Minimum Cash Balance Requirement**: P50

### Solution Process:
We will prepare a cash budget for the months of October, November, and December by calculating:

- **Cash Receipts**: 90% of sales of the current month + 10% of sales from the previous month.
- **Net Cash Flows**: Cash receipts minus cash disbursements.
- **Ending Cash Balance**: Net cash flow added to the beginning cash balance.
- **Cumulative Cash Balance**: Ending cash balance minus the minimum required cash balance.

Let me go ahead and calculate the full cash budget for October, November, and December.

### Step 1: Compute Cash Receipts
- **October**:
   - Cash sales from October: 90% of P400 = P360
   - Collection from September (10% of P500): P50
   - Total cash receipts for October: P360 + P50 = P410

- **November**:
   - Cash sales from November: 90% of P600 = P540
   - Collection from October (10% of P400): P40
   - Total cash receipts for November: P540 + P40 = P580

- **December**:
   - Cash sales from December: 90% of P700 = P630
   - Collection from November (10% of P600): P60
   - Total cash receipts for December: P630 + P60 = P690

### Step 2: Cash Budget

| Month      | Cash Receipts | Cash Disbursements | Net Cash Flow | Beginning Cash Balance | Ending Cash Balance | Min. Cash Balance | Cumulative Excess |
|------------|---------------|--------------------|---------------|------------------------|---------------------|-------------------|-------------------|
| October    | P410          | P500               | -P90          | P25                    | -P65                | P50               | **Needed Financing** |
| November   | P580          | P500               | +P80          | 0 (due to financing)    | P80                 | P50               | P30               |
| December   | P690          | P500               | +P190         | P30                    | P220                | P50               | P170              |

### Summary:
- **October**: The ending cash balance falls below the minimum required balance, so financing will be needed to bring it to P50.
- **November**: After financing, there is a small excess of P30.
- **December**: By the end of December, there is a significant cumulative excess of P170.

Would you like further details on any step or more clarification? Let me know if you want to dive deeper into any specific part.

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### Relative Questions:
1. How would the cash budget change if 20% of sales were collected the following month instead of 10%?
2. What if the minimum cash balance requirement was raised to P100? How would financing change?
3. How would changes in cash disbursements (like increasing in November) affect the budget?
4. If sales in December were only P600, what would be the impact on the excess cash balance?
5. How would financing strategies differ if cash receipts were less predictable?

### Tip:
When preparing a cash budget, always plan for possible variations in sales or disbursements to avoid cash shortfalls and the need for emergency financing.

Gerry Jacobs, a financial analyst for Best Value Supermarkets, has prepared the following sales and cash disbursement estimates for the period of August through December of the current year. 90% of sales are for cash, the remaining 10% are collected one month later. All disbursements are on a cash basis. The firm wishes to maintain a minimum cash balance of P50. The beginning cash balance in September is P25. Prepare a cash budget for the months of October, November, and December, noting any needed financing or excess cash available.

This activity covers cash budgeting concepts, including calculating cash receipts, net cash flow, and cumulative excess cash for Best Value Supermarkets over the months of October, November, and December. Learn how to manage minimum cash balance requirements and financing needs.

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