Hess Company has $15,000 in cash on hand on January 1 and has collected the following budget data: January February Sales $1,360,000 $640,000 Cash receipts from customers 851,850 871,300 Cash payments for merchandise inventory 561,700 532,416 Assume Hess has cash payments for selling and administrative expenses including salaries of $30,000 plus commissions of 11% of sales, all paid in the month of sale. The company requires a minimum cash balance of $12,500. Prepare a cash budget for January. Hess Company Cash Budget Two Months Ended January 31 and February 28 January Beginning cash balance Cash receipts Cash available Cash payments: Purchases of merchandise inventory Selling and administrative expenses Total cash payments Ending cash balance before financing Minimum cash balance desired Projected cash excess (deficiency) Financing: Borrowing Principal repayments Total effects of financing Ending cash balance
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.
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January
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February
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Sales
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$1,360,000
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$640,000
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Cash receipts from customers
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851,850
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871,300
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Cash payments for merchandise inventory
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561,700
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532,416
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Assume Hess has cash payments for selling and administrative expenses including salaries of $30,000 plus commissions of 11% of sales, all paid in the month of sale. The company requires a minimum cash balance of $12,500. Prepare a
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Hess Company
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Cash Budget
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Two Months Ended January 31 and February 28
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January
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Beginning cash balance
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Cash receipts
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Cash available
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Cash payments:
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Purchases of merchandise inventory
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Selling and administrative expenses
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Total cash payments
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Ending cash balance before financing
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Minimum cash balance desired
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Projected cash excess (deficiency)
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Financing:
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Borrowing
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Principal repayments
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Total effects of financing
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Ending cash balance
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