SEMI DETAILED LESSON PLAN FOR GRADE 12 STUDENTS

BUSINESS FINANCE

I. Objectives
At the end of the lesson, the students are expected to:
1. Understand the process of cash budgeting.
2. Discuss the use of cash receipts and cash budget.
3. Create their own cash receipts.

II. Subject Matter

Topic: Cash Planning: Cash Budgets

III. Materials
Book, chalk and chalkboard

IV. Procedure
A. Preparation
Greet the students and then ask them to sit properly.

B. Motivation
Review: What is the financial planning process? Contrast long term and short term
financial plans.
Which three statements result as part of the short term financial planning
process?

C. Lesson Proper

Cash Budget (cash forecast). A statement of the firm’s planned inflows or

outflows of cash that is used to estimate its short-term cash requirements.
Sales Forecast. The prediction of the firm’s sales over a given period, based on
external and/or internal data; used as the key input to the short-term financial planning
process.
External Forecast. A sales forecast based on the relationships observed between
the firm’s sales and certain key external economic indicators.
Internal Forecast. A sales forecast based on the build-up, or consensus, of sales
forecasts through the firm’s own sales channel.
Cash Receipts. All of firm’s inflows of cash during a given financial period.

PREPARING THE CASH BUDGET

Forecast sales. The initial entry is merely informational. It is provided as an aid in
calculating other sales-related item.
Cash sales. The cash sales shown for each month represents 20% of the total sales
forecast for that month.
Collections of A/R. These entries represents the collection of accounts receivable
resulting from sales in earlier months.
 Lagged 1 month. These figures represents sales made in the preceding
month that generated accounts receivable collected in the current month.
Lagged 2 months. These figures represents sales made 2 months earlier that
generated accounts receivable collected in the current month.
Other cash receipts. These are cash receipts expected from sources other than
sales. Interest received, dividends received, proceeds from the sale of equipment, stock and
bond sale proceeds and lease receipts may show up here.
Total cash receipts. The figure represents the total of all the cash receipts listed
for each month.

Cash Receipts
Month Month Month Month Month
Sales Forecast
Cash Sales (20%)
Collection of A/R
Lagged 1 month
Lagged 2 months
Other cash receipts
Total Cash Receipts

D. Activity/Application
Identify cash sales in the example problem.

E. Generalization
Recognize the importance of knowing the process and planning for cash budget.

F. Evaluation
Make a schedule of projected cash receipts for a firm.
A firm has actual sales of 65,000 in April and 60,000 in May. It expects
sales of 70,000 in June and 100,000 in July and in August. Assuming that sales are the only
source of cash inflows and that half of them are for cash and the remained are collected
evenly over the following two months, what are the firm’s expected cash receipt for June,
July and August?

G. Assignment
Research on Cash Disbursement.
Name: __________________________________________________ Date:___________

Grade: ________________

Multiple Choices. Encircle the letter of the correct answer.

1. The prediction of the firm’s sales over a given period, based on external and/or
internal data; used as the key input to the short-term financial planning process.
a. Cash Budget b. Sales Forecast
c. External Forecast d. Internal Forecast
2. A statement of the firm’s planned inflows or outflows of cash that is used to estimate
its short-term cash requirements.
a. Cash Budget b. Sales Forecast
c. External Forecast d. Internal Forecast
3. All of firm’s inflows of cash during a given financial period.
a. Cash Budget b. Sales Forecast
c. Cash Receipts d. Collections of A/R
4. A sales forecast based on the relationships observed between the firm’s sales and
certain key external economic indicators.
a. Cash Receipts b. Collections of A/R
c. External Forecast d. Internal Forecast
5. These entries represents the collection of accounts receivable resulting from sales in
earlier months.
a. Cash Receipts b. Collections of A/R
c. External Forecast d. Internal Forecast
6. A sales forecast based on the build-up, or consensus, of sales forecasts through the
firm’s own sales channel.
a. Cash Receipts b. Collections of A/R
c. External Forecast d. Internal Forecast
7. These are cash receipts expected from sources other than sales. Interest received,
dividends received, proceeds from the sale of equipment, stock and bond sale
proceeds and lease receipts may show up here.
a. Sales Forecast b. Collections of A/R
c. Total Cash Receipts d. Other Cash Receipts
8. The cash sales shown for each month represents 20% of the total sales forecast for
that month.
a. Cash Sales b. Collections of A/R
c. External Forecast d. Internal Forecast
9. The figure represents the total of all the cash receipts listed for each month.
a. Sales Forecast b. Collections of A/R
c. Total Cash Receipts d. Other Cash Receipts
10. These figures represents sales made 2 months earlier that generated accounts
receivable collected in the current month.
a. Cash Receipts b. Total Cash Receipts.
c. Lagged 1 month d. Lagged 2 months
Coulson Industries, a defense contractor, is developing a cash budget for
October, November, and December. Coulson’s sales in August and September
were 100,000 and 200,000 respectively. Sales of 400,000, 300,000, and
200,000 have been forecast for October, November and December,
respectively. Historically, 20% of the firm’s sales have been for cash, 50% have
generated accounts receivable collected after 1 month, and the remaining 30%
have generated accounts receivable collected after two months. Bad debt
expenses have been negligible. In December, the firm will receive a 30,000
dividend from stock in a subsidiary.

11. What are the sales forecast on October, November and December?
a. 100,000, 200,000, 300,000 b. 400,000, 300,000, 200,000
c. 900,000, 800,000, 700,000 d. 200,000, 300,000, 400,000
12. How many percent of A/R that will be collected in two months?
a. 50% b. 10%
c. 30% d. 20%
13. How many percent of A/R that will be collected in one month?
a. 50% b. 10%
c. 30% d. 20%
14. On August, Coulson Industries has sales of 100,000, if 20% will be the cash sales
which is 20,000, how much will be collected after two months?
a. 50, 000 b. 30, 000
c. 10, 000 d. 40, 000
15. Coulson Industries predicted that the sales on December will be 200,000, how much
will be the cash sales for December?
a. 50, 000 b. 30, 000
c. 10, 000 d. 40, 000
16. If the cash sales for October is 80,000. How much will be collected after 1 month?
a. 500, 000 b. 300, 000
c. 200, 000 d. 400, 000
17. How much is the total receipt for August?
a. 20, 000 b. 80, 000
c. 30, 000 d. 10, 000
18. Coulson Industries will received a dividend on _____________.
a. September b. October
c. December d. November
19. If the sales forecast for November is 300,000. How much will be the cash sales?
a. 20, 000 b. 80, 000
c. 30, 000 d. 60, 000
20. How much will be the total receipts on September?
a. 90, 000 b. 80, 000
c. 100, 000 d. 70, 000