A company is preparing its cash buget for the month of May. Below is A/R information: Actual credit sale for March $130,000 Actual credit sale for April $160,000 Estimated credit sales for May $210,000 Estimated collections in the month of sale 25% Estimated collections in the first month after the month of sale 60% Estimated collections in the second month after the month of sale 10% Estimated provision of bad debts (made in month of sale) 5% ** Firm writes off all UNCOLLECTIBLE account receievables at the end of second month after the month of sale. Required: For the month of May, calculate the following: 1. Estimated cash receipts from account recievable collections. 2. The gross amount of A/R at the end of the month (after appropriate write off of uncollectiable amounts). 3. The net amount of A/R at the end of the month 4. Recalculate the requirement 1 & 2 under the assumption that estimated collections in the month of sale equal 60% and in the first month of sale equal 25%. Thanks Kiran
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.
A company is preparing its cash buget for the month of May. Below is A/R information:
| Actual credit sale for March | $130,000 |
| Actual credit sale for April | $160,000 |
| Estimated credit sales for May | $210,000 |
| Estimated collections in the month of sale | 25% |
| Estimated collections in the first month after the month of sale | 60% |
| Estimated collections in the second month after the month of sale | 10% |
| Estimated provision of |
5% |
| ** Firm writes off all UNCOLLECTIBLE account receievables at the end of second month after the month of sale. |
Required: For the month of May, calculate the following:
1. Estimated cash receipts from account recievable collections.
2. The gross amount of A/R at the end of the month (after appropriate write off of uncollectiable amounts).
3. The net amount of A/R at the end of the month
4. Recalculate the requirement 1 & 2 under the assumption that estimated collections in the month of sale equal 60% and in the first month of sale equal 25%.
Thanks
Kiran
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