Data regarding a company's monthly sales for the last six months of the year and its projected collection patterns are shown below: Forecasated sales: July = P775,000 August = P750,000 September = P825,000 October = P800,000 November = P850,000 December = P900,000 Types of sales: Cash sales = 20% Credit sales = 80% Collection pattern for credit sales: In the month of sale = 40% In the first month following the sale = 57% Uncollectible = 3% The cost of merchandise averages 40% of its selling price. The company's policy is to maintain an inventory equal to 25% of the next month's forecasted sales. The inventory balance at cost is P80,000 as of June 30. How much is the total cash receipts that would be budgeted for the month of September?
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.
Data regarding a company's monthly sales for the last six months of the year and its projected collection patterns are shown below:
Forecasated sales:
July = P775,000
August = P750,000
September = P825,000
October = P800,000
November = P850,000
December = P900,000
Types of sales:
Cash sales = 20%
Credit sales = 80%
Collection pattern for credit sales:
In the month of sale = 40%
In the first month following the sale = 57%
Uncollectible = 3%
The cost of merchandise averages 40% of its selling price. The company's policy is to maintain an inventory equal to 25% of the next month's
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