Schedule of Expected Cash Payments

Schedule of expected cash payments to suppliers shows the budgeted cash payments on purchases during a period. The schedule of expected cash payments is a component of master budget and it is prepared after direct material purchases budget but before cash budget.

The expected cash collections during a period is calculated on the basis of total purchases figure, that is obtained from direct material purchases budget, and on the percentage / proportion in which purchases are to be paid for in the current and following periods.

Format and Example

The following example shows the format of schedule of expected cash payments to suppliers. The purchases figures are obtained from the direct material purchases budget of company A. The company expects to pay 80% of the purchases in the period of purchase and 20% in following period.

a) Q1 Purchases = $15,757

    Payments in Q1 = $15,757 × 80% = $12,606;    Payments in Q2 = $15,757 × 20% = $3,151

b) Q2 Purchases = $12,128

    Payments in Q2 = $12,128 × 80% = $9,702;      Payments in Q3 = $12,128 × 20% = $2,426

c) Q3 Purchases = $17,398

    Payments in Q3 = $17,398 × 80% = $13,918;    Payments in Q4 = $17,398 × 20% = $3,480

d) Q4 Purchases = $28,060

    Payments in Q4 = $28,060 × 80% = $22,448

Company A
Schedule of Expected Cash Payments
For the Year Ending December 30, 2010
 
 Quarter 
 1234Year
Beginning AP$2,350   $2,350
Quarter 1 Purchases (a)12,606$3,151  15,757
Quarter 2 Purchases (b) 9,702$2,426 12,128
Quarter 3 Purchases (c)  13,918$3,48017,398
Quarter 4 Purchases (d)   22,44822,448
Total Expected Payments$14,956$12,853$16,344$25,928$70,081

Written by Irfanullah Jan