Cash Budget; Income Statement; Balance Sheet; Changing Assumptions Refer to the data for Minden Company in Problem 8-19. The company is considering making the following changes to the assumptions underlying its master budget: 1. Sales are budgeted for $220,000 for May. 2. Each month’s credit sales are collected 60% in the month of sale and 40% in the month following the sale. 3. The company pays for 50% of its merchandise purchases in the month of the purchase and the remaining 50% in the month following the purchase. All other information from Problem 8-19 that is not mentioned above remains the same. Required: Using the new assumptions described above, complete the following requirements; 1. Calculate the expected cash collections for May. 2. Calculate the expected cash disbursements tor merchandise purchases for May. 3. Prepare a cash budget for May. 4. Using Schedule 9 as your guide, prepare a budgeted income statement for May. 5. Prepare a budgeted balance sheet as of May 31.
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.
Refer to the data for Minden Company in Problem 8-19. The company is considering making the following changes to the assumptions underlying its
1. Sales are budgeted for $220,000 for May.
2. Each month’s credit sales are collected 60% in the month of sale and 40% in the month following the sale.
3. The company pays for 50% of its merchandise purchases in the month of the purchase and the remaining 50% in the month following the purchase.
All other information from Problem 8-19 that is not mentioned above remains the same.
Required:
Using the new assumptions described above, complete the following requirements;
1. Calculate the expected cash collections for May.
2. Calculate the expected cash disbursements tor merchandise purchases for May.
3. Prepare a cash budget for May.
4. Using Schedule 9 as your guide, prepare a
5. Prepare a budgeted balance sheet as of May 31.
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