Example 2: Cash Budget: Assuming the same details as in the purchases budget problem above, prepare a cash budget for the month of February given the following information: The company pays for 50% of all purchases in the month of purchase and 50% in the following month. Purchases for the month of January were $208,000. All sales are on account. The Company has historically collected 40% in the month of sale and 55% in the following month. Five percent of all credit sales are normally uncollectible. The cash balance on February 1 was $20,000. The Company borrowed $50,000 on February 2 from the bank and paid interest of $500 to the bank in February. Out-of-pocket selling and administrative costs of $15,000 were paid in February. Also, furniture costing $5,000 was purchased with cash. No other transactions affecting cash occurred in February.
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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