December 31, 2017, account balances: Cash $ 26,000 Accounts Receivable 19,000 Merchandise Inventory 25,000 Accounts Payable 11,000 Salaries and Commissions Payable 2,950 Budgeted amounts for 2018: January February Sales, all on account $ 81,000 $ 82,800 Purchases, all on account 40,600 41,500 Commissions Expense 4,050 4,140 Salaries Expense 3,500 3,500 Rent Expense 2,400 2,400 Depreciation Expense 900 900 Insurance Expense 300 300 Income Tax Expense 2,400 2,400
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.
Preparing a financial budget—schedule of cash receipts, schedule cash payments,
Baxter Company’s budget committee provides the following information:
Requirements
- Prepare the schedule of cash receipts from customers for January and February 2018. Assume cash receipts are 80% in the month of the sale and 20% in the month following the sale.
- Prepare the schedule of cash payments for purchases for January and February 2018. Assume purchases are paid 60% in the month of purchase and 40% in the month following the purchase.
- Prepare the schedule of cash payments for selling and administrative expenses for January and February 2018. Assume 40% of the accrual. for Salaries and Commissions Payable is for commissions and 60% is for salaries. The December 31 balance will be paid in January. Salaries and commissions are paid 30% in the month incurred and 70% in the following month. Rent and income tax expenses are paid as incurred. Insurance expense is an expiration of the prepaid amount.
- Prepare the cash budget for January and February 2018. Assume no financing took place.
Trending now
This is a popular solution!
Step by step
Solved in 3 steps
