Assume a company is preparing a budget for its first two months of operations. During the first and second months it expects credit sales of $42,000 and $71,000, respectively. The company expects to collect 45% of its credit sales in the month of the sale, 50% in the following month, and 5% is deemed uncollectible. What amount of cash collections from credit sales would the company include in its cash budget for the second month? Multiple Choice $56,500 $31,950 $35,500 $52,950
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.
Assume a company is preparing a budget for its first two months of operations. During the first and second months it expects credit sales of $42,000 and $71,000, respectively. The company expects to collect 45% of its credit sales in the month of the sale, 50% in the following month, and 5% is deemed uncollectible. What amount of cash collections from credit sales would the company include in its
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$56,500
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$31,950
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$35,500
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$52,950
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