anet Wooster owns a retail store that sells new and used sporting equipment. Janet has requested a cash budget for October. After examining the records of the company, you find the following: Cash balance on October 1 is $1,130. Actual sales for August and September are as follows: August September Cash sales $6,000 $4,500 Credit sales 58,000 61,000 Total sales $64,000 $65,500 Credit sales are collected over a three-month period: 40 percent in the month of sale, 36 percent in the next month, and 22 percent in the second month after the sale. The remaining sales are uncollectible. Inventory purchases average 70 percent of a month’s total sales. Of those purchases, 45 percent are paid for in the month of purchase. The remaining 55 percent are paid for in the following month. Salaries and wages total $3,850 per month. Rent is $3,150 per month. Taxes to be paid in October are $1,635. Janet usually withdraws $3,500 each month as her salary. Advertising is $1,500 per month. Other operating expenses total $3,800 per month. Internet and telephone fees are $320 per month. Janet tells you that she expects cash sales of $5,000 and credit sales of $64,000 for October. She likes to have $3,000 on hand at the end of the month and is concerned about the potential October ending balance. Required:
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.
anet Wooster owns a retail store that sells new and used sporting equipment. Janet has requested a
- Cash balance on October 1 is $1,130.
- Actual sales for August and September are as follows:
August September Cash sales $6,000 $4,500 Credit sales 58,000 61,000 Total sales $64,000 $65,500 - Credit sales are collected over a three-month period: 40 percent in the month of sale, 36 percent in the next month, and 22 percent in the second month after the sale. The remaining sales are uncollectible.
- Inventory purchases average 70 percent of a month’s total sales. Of those purchases, 45 percent are paid for in the month of purchase. The remaining 55 percent are paid for in the following month.
- Salaries and wages total $3,850 per month.
- Rent is $3,150 per month.
- Taxes to be paid in October are $1,635.
- Janet usually withdraws $3,500 each month as her salary.
- Advertising is $1,500 per month.
- Other operating expenses total $3,800 per month.
- Internet and telephone fees are $320 per month.
Janet tells you that she expects cash sales of $5,000 and credit sales of $64,000 for October. She likes to have $3,000 on hand at the end of the month and is concerned about the potential October ending balance.
Required:
Prepare a cash budget for October. Include supporting schedules for cash collections and cash payments. Round your intermediate computations and final answers to the nearest dollar.
Wooster Sporting Goods StoreCash BudgetFor the Month of October
| Beginning cash balance | $fill in the blank 1 | |
| Collections: | ||
| Cash sales | fill in the blank 2 | |
| Credit sales: | ||
| October | fill in the blank 3 | |
| September | fill in the blank 4 | |
| August | fill in the blank 5 | |
| Total cash available | $fill in the blank 6 | |
| Disbursements: | ||
| Inventory purchases: | ||
| October | $fill in the blank 7 | |
| September | fill in the blank 8 | |
| Salaries and wages | fill in the blank 9 | |
| Rent | fill in the blank 10 | |
| Taxes | fill in the blank 11 | |
| Other operating expenses | fill in the blank 12 | |
| Owner withdrawal | fill in the blank 13 | |
| Advertising | fill in the blank 14 | |
| Internet and telephone | fill in the blank 15 | fill in the blank 16 |
| Ending cash balance | $fill in the blank 17 |
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