Betta Jets, a toy wholesaler, is hoping to expand into manufacturing its own products. The business owners have provided you with the following information: All sales are on credit. The company collects 70% in the month following the sale and 30% two months following the sale. All purchases of stock are paid for one month after the purchase. Equipment costing $250,000 is expected to be acquired and paid for in July. The selling and distribution expenses are $48 000 each month. Administrative expenses are $42 000 per month. This includes $5 000 of depreciation expense. Selling Expenses and Administrative Expenses are paid in the month they are incurred. The cash balance on 1 July 2022 is $28 000. The following sales and purchases data in 2022 have been compiled for the preparation of the budget: April May June July $ $ $ $ Purchases 300 000 360 000 340 000 400 000 Sales 800 000 860 000 840 000 880 000 REQUIRED: Prepare a cash budget for the month of July 2022.
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.
Betta Jets, a toy wholesaler, is hoping to expand into manufacturing its own products. The business owners have provided you with the following information:
- All sales are on credit. The company collects 70% in the month following the sale and 30% two months following the sale.
- All purchases of stock are paid for one month after the purchase.
- Equipment costing $250,000 is expected to be acquired and paid for in July.
- The selling and distribution expenses are $48 000 each month.
- Administrative expenses are $42 000 per month. This includes $5 000 of
depreciation expense. - Selling Expenses and Administrative Expenses are paid in the month they are incurred.
The cash balance on 1 July 2022 is $28 000.
The following sales and purchases data in 2022 have been compiled for the preparation of the budget:
|
|
April |
May |
June |
July |
|
|
$ |
$ |
$ |
$ |
|
Purchases |
300 000 |
360 000 |
340 000 |
400 000 |
|
Sales |
800 000 |
860 000 |
840 000 |
880 000 |
REQUIRED:
Prepare a
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