Advent used their historic collection percentages to budget for sales revenue for the first quarter of 2020 as follows: January $100,000 February $175,000 March $250,000 The company anticipates that approximately 80% of sales each month will be on credit. The historic percentages on collection are: 50% in the month of sale 40% in the month following the sale 10% two months following the sale Required: Prepare a monthly cash collections/receipts budget for the first quarter of 2020.
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.
Question 4 Part I
Advent used their historic collection percentages to budget for sales revenue for the first quarter of 2020
as follows:
January $100,000
February $175,000
March $250,000
The company anticipates that approximately 80% of sales each month will be on credit. The historic percentages on collection are:
50% in the month of sale
40% in the month following the sale
10% two months following the sale
Required: Prepare a monthly cash collections/receipts budget for the first quarter of 2020.
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