1. The following information is budgeted for McCracken Plumbing Supply Corporation for next quarter. April May June Sales 110,000 130,000 180,000 Merchandise Purchases 85,000 92,000 105,000 Selling and Administrative Expenses 50,000 50,000 50,000 All sales at McCracken are on credit. Forty percent are collected in the month of sale, 58% in the month following the sale, and the remaining 2% are uncollectable. Merchandise purchases are paid in full the month following the month of purchase. The selling and administrative expenses above include $8,000 of depreciation on display fixtures and warehouse equipment. All other selling and administrative expenses are paid as incurred. McCracken wants to maintain a cash balance of $15,000. Any amount below this can be borrowed from a local bank as needed in increments of $1,000 at a 12% annual interest rate. All borrowings are made at the beginning of the month so interest expense will need to be accrued. McCracken expects to have $24,000 of cash on hand at the beginning of May. Prepare McCracken’s cash budget for May and June. (Interest is calculated principle x rate x time). When feasible, loans are repaid at the end of the month so interest expense will also need to be recorded. Please Answer With A Step By Step Solutions
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.
1. The following information is budgeted for McCracken Plumbing Supply Corporation for next quarter.
April May June
Sales 110,000 130,000 180,000
Merchandise Purchases 85,000 92,000 105,000
Selling and Administrative Expenses 50,000 50,000 50,000
All sales at McCracken are on credit. Forty percent are collected in the month of sale, 58% in the month following the sale, and the remaining 2% are uncollectable. Merchandise purchases are paid in full the month following the month of purchase. The selling and administrative expenses above include $8,000 of
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Could you please explain the process by which you got these answers? I am trying to learn how to do problems similar to these but don't understand where the numbers come from.
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