Boris detergents expects to have a cash balance of P46,000 on January 1, 2020. These are the relevant monthly budget data for the first two months of 2017. 1. Collections from customers: January P71,000, February P146,000. 2. Payments to suppliers: January P40,000, February P75,000. 3. Wages: January P30,000, February P40,000. Wages are paid in the month they are incurred. 4. Administrative expenses: January P21,000, February P24,000. These costs include depreciation of P1,000 per month. All other costs are paid as incurred. 5. Selling expenses: January P15,000, February P20,000. These costs are exclusive of depreciation. They are paid as incurred. 6. Sales of short-term investments in January are expected to realize P12,000 in cash. The Company has a line of credit at a local bank that enables it to borrow up to P25,000. The company wants to maintain a minimum monthly cash balance of P20,000. Prepare a cash budget for January and February.
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.
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