Avalon Company makes a product that is very popular as a Mother’s Day gift, thus peak sales occur in May of each year, as shown in the company’s sales budget for the second quarter given below. April May June Total Budgeted sales (on account) 300,000 500,000 200,000 1,000,000 From past experience, the company has learned that 20% of a month’s sales are collected in the month of sale, another 70% are collected in the month following sale, and the remaining 10% are collected in the second month following sale. Bad debt are negligible and can be ignored. February sales totaled P230, 000 and March sales totaled P260, 000. Prepared a schedule of expected cash collection from sales, by month and in total, for the second quarter. Assume that the company will prepare a budgeted statement of financial position as of June 30. Compute the accounts receivable as of that date.
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.
Avalon Company makes a product that is very popular as a Mother’s Day gift, thus peak sales occur in May of each year, as shown in the company’s sales budget for the second quarter given below.
| April | May | June | Total | |
| Budgeted sales (on account) | 300,000 | 500,000 | 200,000 | 1,000,000 |
From past experience, the company has learned that 20% of a month’s sales are collected in the month of sale, another 70% are collected in the month following sale, and the remaining 10% are collected in the second month following sale.
- Prepared a schedule of expected cash collection from sales, by month and in total, for the second quarter.
- Assume that the company will prepare a budgeted
statement of financial position as of June 30. Compute theaccounts receivable as of that date.
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