Golden Diamond Jeweler Inc is currently forecasting a revenue of Php2,000,000, Php3,200,000 and Php1,200,000 for the months of October, November, and December respectively. Sales of the month of September is Php1,300,000. The business currently have a cash balance of 500,000 at the end of September and the company requires Php800,000 as its minimum cash requirement. Given the additional information below, prepare a cash budget for the months of October, November, and December 50% of the company’s revenue is usually paid in cash and 50% is paid through credit card where credit card companies usually pay the following month. Additional income of Php200,000 per month is receive from cleaning services of jewelries. Companies purchases on credit per month are Php300,000 for September; Php200,000 for October; Php500,000 for November and Php700,000 on December which are all paid the following month of purchase. Salaries and wages would usually average to Php80,000 per month Costs of sales is usually 30% of monthly sales Operating expense is usually 10% of monthly sales Loans payment per month is Php100,000 It is expected that repairs and maintenance expense of Php10,000 will be incurred every month The company expects to purchase new equipment worth Php100,000 on November Tax of Php200,000 will be paid on December The company is also to pay a total of Php100,000 for employees end year bonus on December. A total of Php300,000 is to be paid as dividends to preferred stockholders on December.
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.
Golden Diamond Jeweler Inc is currently
50% of the company’s revenue is usually paid in cash and 50% is paid through credit card where credit card companies usually pay the following month.
Additional income of Php200,000 per month is receive from cleaning services of jewelries.
Companies purchases on credit per month are Php300,000 for September; Php200,000 for October; Php500,000 for November and Php700,000 on December which are all paid the following month of purchase.
Salaries and wages would usually average to Php80,000 per month
Costs of sales is usually 30% of monthly sales
Operating expense is usually 10% of monthly sales
Loans payment per month is Php100,000
It is expected that repairs and maintenance expense of Php10,000 will be incurred every month
The company expects to purchase new equipment worth Php100,000 on November
Tax of Php200,000 will be paid on December
The company is also to pay a total of Php100,000 for employees end year bonus on December.
A total of Php300,000 is to be paid as dividends to preferred stockholders on December.
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