Goodies Ltd is a small wholesale business importing and supplying toys to local toy stores. At the beginning of the third quarter 2021, the owner did a cash budget for each month of the third quarter: July, August and September. Due to unforeseeable circumstances, he now expects the sales to be half of what he originally forecasted for each month and wants your help to revise the cash budget. Note: all sales are cash sales and no cash payments are affected. Goodies Ltd – Original Cash Budget for the third quarter 2021 Jul Aug Sep Cash Receipts from Sales $30,000 $40,000 $50,000 Less Cash payments: Cash paid for inventory purchase ($12,000) ($16,000) ($21,000) Cash paid for salary ($4,000) ($4,000) ($4,000) Cash paid for selling & admin expenses ($1,000) ($1,000) ($1,000) Total Payments ($17,000) ($21,000) ($26,000) =Net cash from operations $13,000 $19,000 $24,000 Add: Beginning Cash balance $3,000 $16,000 $35,000 =Ending Cash balance $16,000 $35,000 $59,000 Based on the revised cash budget, what is the ending cash balance for August? Choose the correct answer: -$1,000 $35,000 $0 $17,500
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.
Goodies Ltd is a small wholesale business importing and supplying toys to local toy stores. At the beginning of the third quarter 2021, the owner did a
Goodies Ltd – Original Cash Budget for the third quarter 2021
|
Jul |
Aug |
Sep |
|
|
Cash Receipts from Sales |
$30,000 |
$40,000 |
$50,000 |
|
Less Cash payments: |
|
|
|
|
($12,000) |
($16,000) |
($21,000) |
|
($4,000) |
($4,000) |
($4,000) |
|
($1,000) |
($1,000) |
($1,000) |
|
Total Payments |
($17,000) |
($21,000) |
($26,000) |
|
=Net cash from operations |
$13,000 |
$19,000 |
$24,000 |
|
Add: Beginning Cash balance |
$3,000 |
$16,000 |
$35,000 |
|
=Ending Cash balance |
$16,000 |
$35,000 |
$59,000 |
Based on the revised cash budget, what is the ending cash balance for August?
Choose the correct answer:
- -$1,000
- $35,000
- $0
- $17,500
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