Butterfly Limited has finalised its budget for 20X8 and sales are anticipated to be £243,600 in January, £1,393,200 in February, £516,000 in March and £769,200 in April. Butterfly is budgeting that 50% of sales will be cash and the other 50% will be on credit when 80% of receivables are expected to pay in the month after sale, 15% in the second month after sale, while the remaining 5% are expected to be bad debts. Credit customers who pay in the month of sale can claim a 5% cash settlement discount. Page 10 of 14 [2044] What level of sales receipts should be shown in the cash budget for March 20X8? a) £820,650 b) £833,550 c) £1,425,432 d) £1,438,332
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.
26. Butterfly Limited has finalised its budget for 20X8 and sales are anticipated to
be £243,600 in January, £1,393,200 in February, £516,000 in March and £769,200
in April.
Butterfly is budgeting that 50% of sales will be cash and the other 50% will be on
credit when 80% of receivables are expected to pay in the month after sale, 15%
in the second month after sale, while the remaining 5% are expected to be
debts.
Credit customers who pay in the month of sale can claim a 5% cash settlement
discount. Page 10 of 14
[2044]
What level of sales receipts should be shown in the
a) £820,650
b) £833,550
c) £1,425,432
d) £1,438,332
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