Fresplanade Co. had the following historical collection pattern for its credit sales: 75% collected in the month of sale 12% collected in the first month after month of sale 8% collected in the second month after month of sale 3% collected in the third month after month of sale 2% uncollectible The sales on open account (credit sales) have been budgeted for the last six months of the year as shown below: July $ 72,000 August $ 84,000 September $ 96,000 October $ 108,000 November $ 120,000 December $ 102,000 The estimated cash collections during July from credit sales made in July by Fresplanade Co. is:
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.
Fresplanade Co. had the following historical collection pattern for its credit sales:
75% collected in the month of sale
12% collected in the first month after month of sale
8% collected in the second month after month of sale
3% collected in the third month after month of sale
2% uncollectible
The sales on open account (credit sales) have been budgeted for the last six months of the year as shown below:
| July | $ | 72,000 | |
| August | $ | 84,000 | |
| September | $ | 96,000 | |
| October | $ | 108,000 | |
| November | $ | 120,000 | |
| December | $ | 102,000 | |
The estimated cash collections during July from credit sales made in July by Fresplanade Co. is:
The account receivables represent the amount due from the customers of the business. The account receivables are the current assets of the business.
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