Del Spencer is the owner and founder of Del Spencer’s Men’s Clothing Store. Del Spencer’s hasits own house charge accounts and has found from past experience that 10 percent of its salesare for cash. The remaining 90 percent are on credit. An aging schedule for accounts receivablereveals the following pattern:15 percent of credit sales are paid in the month of sale.65 percent of credit sales are paid in the first month following the sale.14 percent of credit sales are paid in the second month following the sale.6 percent of credit sales are never collected.Credit sales that have not been paid until the second month following the sale are consideredoverdue and are subject to a 3 percent late charge.Del Spencer’s has developed the following sales forecast:May $60,000June 55,000July 45,000August 56,000September 83,000 Required:Prepare a schedule of cash receipts for August and 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.
Del Spencer is the owner and founder of Del Spencer’s Men’s Clothing Store. Del Spencer’s has
its own house charge accounts and has found from past experience that 10 percent of its sales
are for cash. The remaining 90 percent are on credit. An aging schedule for accounts receivable
reveals the following pattern:
15 percent of credit sales are paid in the month of sale.
65 percent of credit sales are paid in the first month following the sale.
14 percent of credit sales are paid in the second month following the sale.
6 percent of credit sales are never collected.
Credit sales that have not been paid until the second month following the sale are considered
overdue and are subject to a 3 percent late charge.
Del Spencer’s has developed the following sales forecast:
May $60,000
June 55,000
July 45,000
August 56,000
September 83,000
Required:
Prepare a schedule of cash receipts for August and September.
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