Care wear plc, a merchandising firm, has planned the following sales for the next four months: Sales are made 40% for cash and 60% on credit. From experience, the company has learned that sales made on credit are collected 70% in the month of sale, 20% in the first month following sale, 8% in the second month following the sale, and 2 % in uncollected. Assume the following budgeted data for December also occurred in cash: Purchases $52000 Selling and administrative expenses $18000 (includes $8000 depreciation) Equipment purchase $15000 Cash balance, beginning of December $6000 Required: Using this data above, prepare a cash budget for the month of December. The company wishes to maintain a minimum cash balance of $4,000. If required a company can borrow any amount from a bank. All borrowings are made at the end of the month. No borrowing or interest will be repaid during the period.
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.
Care wear plc, a merchandising firm, has planned the following sales for the next four months:
Sales are made 40% for cash and 60% on credit. From experience, the company has learned that
sales made on credit are collected 70% in the month of sale, 20% in the first month following
sale, 8% in the second month following the sale, and 2 % in uncollected.
Assume the following budgeted data for December also occurred in cash:
Purchases $52000
Selling and administrative expenses $18000 (includes $8000
Equipment purchase $15000
Cash balance, beginning of December $6000
Required:
Using this data above, prepare a
to maintain a minimum cash balance of $4,000. If required a company can borrow any
amount from a bank. All borrowings are made at the end of the month. No borrowing or
interest will be repaid during the period.
time- 10 minutes
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