From the information below, prepare a cash budget for a company for April, May, and June 2019 in a columnar form. Month Sales Purchases Wages Exp. Jan. (actual) 80,000 45,000 20,000 5,000 Feb. (actual) 80,000 40,000 18,000 6,000 Mar. (actual) 75,000 42,000 22,000 6,000 Apr. Budget 90,000 50,000 24,000 6,000 May Budget 85,000 45,000 20,000 6,000 Jun. Budget 80,000 35,000 18,000 5,000 You are further informed that: 10% of purchases and 20% of sales are for cash. The average collection period of the company is half a month and credit purchases are paid off regularly after one month. Wages are paid half monthly and the rent of $500, excluded in expense, is paid monthly. Cash and bank balance on April 1 was $15,000, and the company aims to keep it below this figure at the end of every month. The excess cash is placed in fixed deposits.
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.
- From the information below, prepare a
cash budget for a company for April, May, and June 2019 in a columnar form.
|
Month |
Sales |
Purchases |
Wages |
Exp. |
|
Jan. (actual) |
80,000 |
45,000 |
20,000 |
5,000 |
|
Feb. (actual) |
80,000 |
40,000 |
18,000 |
6,000 |
|
Mar. (actual) |
75,000 |
42,000 |
22,000 |
6,000 |
|
Apr. Budget |
90,000 |
50,000 |
24,000 |
6,000 |
|
May Budget |
85,000 |
45,000 |
20,000 |
6,000 |
|
Jun. Budget |
80,000 |
35,000 |
18,000 |
5,000 |
You are further informed that:
- 10% of purchases and 20% of sales are for cash.
- The average collection period of the company is half a month and credit purchases are paid off regularly after one month.
- Wages are paid half monthly and the rent of $500, excluded in expense, is paid monthly.
- Cash and bank balance on April 1 was $15,000, and the company aims to keep it below this figure at the end of every month. The excess cash is placed in fixed deposits.
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