Cash Receipts The sales budget for Perrier Inc. is forecasted as follows: Month Sales Revenue May $100,000 June 170,000 July 180,000 August 120,000 To prepare a cash budget, the company must determine the budgeted cash collections from sales. Historically, the following trend has been established regarding cash collection of sales: 60 percent in the month of sale. 20 percent in the month following sale. 15 percent in the second month following sale. 5 percent uncollectible. The company gives a 1 percent cash discount for payments made by customers during the month of sale. The accounts receivable balance on April 30 is $27,000, of which $6,000 represents uncollected March sales and $21,000 represents uncollected April sales. Prepare a schedule of budgeted cash collections from sales for May, June, and July. Include a three-month summary of estimated cash collections. Perrier, Inc. Schedule of Budgeted Cash Collections Quarterly by Months May June July Total Total Cash receipts: Answer Answer Answer Answer
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.
Cash Receipts
The sales budget for Perrier Inc. is
| Month | Sales Revenue |
|---|---|
| May | $100,000 |
| June | 170,000 |
| July | 180,000 |
| August | 120,000 |
To prepare a
- 60 percent in the month of sale.
- 20 percent in the month following sale.
- 15 percent in the second month following sale.
- 5 percent uncollectible.
The company gives a 1 percent cash discount for payments made by customers during the month of sale. The
| Perrier, Inc. Schedule of Budgeted Cash Collections Quarterly by Months |
||||
|---|---|---|---|---|
| May | June | July | Total | |
| Total Cash receipts: | Answer | Answer | Answer | Answer |
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