1. How much is the net cash flow for December?= 2. How much is the excess cash balance for December?=
Master Budget
A master budget can be defined as an estimation of the revenue earned or expenses incurred over a specified period of time in the future and it is generally prepared on a periodic basis which can be either monthly, quarterly, half-yearly, or annually. It helps a business, an organization, or even an individual to manage the money effectively. A budget also helps in monitoring the performance of the people in the organization and helps in better decision-making.
Sales Budget and Selling
A budget is a financial plan designed by an undertaking for a definite period in future which acts as a major contributor towards enhancing the financial success of the business undertaking. The budget generally takes into account both current and future income and expenses.
The management of MNGO Corporation is currently evaluating if they will need to borrow funds for their fourth quarter operation. Below are the different
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- Forecasted sales for October, November and December are $100,000, $150,000, and $ 180,000 respectively. Based on experience 40% is on cash sales, 40% is collected the following month and the remaining 20% is collected after 2 months when sales was made.
- It is expected that the company will be receiving $10,000 from its investments on Marketable securities on December.
- A scrap value of $3,000 is expected to be received by the company on November for the sales of
depreciated assets. - Monthly cash purchases on inventory is estimated to be 35% of monthly sales.
- Payment of accounts payable is done monthly which is 10% of the previous months sales.
- Monthly salary and wages are paid in cash amounting to $20,000
- Monthly estimated utilities expense is $10,000
- Payment of insurance amounting to $10,000 is due and to be paid in cash by October.
- Bonuses for employees are planned to be given on December with a total amount of $5,000.
- The company is also expected to pay dividend to stockholders amounting to $30,000.
- The ending cash for November is estimated at $40,000.
- The company maintains a minimum cash balance of $50,000.
1. How much is the net
2. How much is the excess cash balance for December?=
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