East Company budgeted the following credit sales during the current year: August $100,000 September, $110,000; October, $120,000; November, $85,000; December,$100,000. Experience has shown that cash from credit sales is received as follows: 25% in the month of sale. (All collections in the month of sale are subject to 2 percent cash discount) 60% in the first month after sale, 12% in the second month after sale, and 3% is uncollectible. Required: How much total cash can East Company expect to collect in October?
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.
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