Folkes, Inc has prepared a sales budget for the second quarter as shown below: Budgeted Sales April $ 400,000 May 500,000 June 600,000 The company is in the process of preparing a cash budget for the second quarter. To this end, the following information has been assembled: Collections on Sales In month of sale 70 % In month following sale 25 % In second month following sale 5 % The company gives a 1% cash discount to customers paying in the month of the sale. Records show past sales to be: January $300,000, February $340,000, and March $360,000. Required: Prepare a schedule of cash receipts for the second quarter.
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.
Folkes, Inc has prepared a sales budget for the second quarter as shown below:
|
|
Budgeted Sales |
||
|
April |
$ |
400,000 |
|
|
May |
|
500,000 |
|
|
June |
|
600,000 |
|
|
|
The company is in the process of preparing a
|
|
Collections on Sales |
|
|
In month of sale |
70 |
% |
|
In month following sale |
25 |
% |
|
In second month following sale |
5 |
% |
|
|
The company gives a 1% cash discount to customers paying in the month of the sale. Records show past sales to be: January $300,000, February $340,000, and March $360,000.
Required:
Prepare a schedule of cash receipts for the second quarter.
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