ainbow, Inc. began operations on January 1 of the current year with a $12,800 cash balance. Fifty percent of sales are collected in the month of sale; 50% are collected in the month following sale. Similarly, 10% of purchases are paid in the month of purchase, and 90% are paid in the month following purchase. The following data apply to January and February: January February Sales $ 43,000 $ 63,000 Purchases 34,000 48,000 Operating expenses 7,800 9,800 If operating expenses are paid in the month incurred and include monthly depreciation charges of $3,300, determine the change in Rainbow’s cash balance during February. Multiple Choice $7,800 increase. $11,100 increase. $16,900 increase. $20,200 increase. None of the answers is correct.
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.
MC Qu. 9-80 Rainbow, Inc. began operations on January...
Rainbow, Inc. began operations on January 1 of the current year with a $12,800 cash balance. Fifty percent of sales are collected in the month of sale; 50% are collected in the month following sale. Similarly, 10% of purchases are paid in the month of purchase, and 90% are paid in the month following purchase. The following data apply to January and February:
| January | February | |||||
| Sales | $ | 43,000 | $ | 63,000 | ||
| Purchases | 34,000 | 48,000 | ||||
| Operating expenses | 7,800 | 9,800 | ||||
If operating expenses are paid in the month incurred and include monthly
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$7,800 increase.
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$11,100 increase.
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$16,900 increase.
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$20,200 increase.
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None of the answers is correct.
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