Determine whether borrowing will be necessary during the period, and if it is, when and for how much.
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.
Company wants to prepare a
The following information has been provided:
As of April 30, the firm had a balance of Rs. 20,000 in cash.
|
Actual Sales |
Rs. |
|
Rs. |
|
January |
50,000 |
May |
70,000 |
|
February |
50,000 |
June |
80,000 |
|
March |
60,000 |
July |
100,000 |
|
April |
60,000 |
August |
100,000 |
- 50% of total sales are for cash. The remaining will be collected equally during the following two months.
- Cost of purchases are 70% of sales, 90% of this cost is paid during the first month after incurrence and the remaining 10% is paid in the following month.
- Dividend of Rs. 10,000 declared on June will be paid in the month of July.
- Company plans to sell machinery costing Rs. 10,000 at an expected gain of Rs. 5,000 in June.
- Purchase plant and machinery in June for Rs. 40,000.
- Income tax payment of Rs. 1,000 will be made in July.
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