Husam Trading Company is in the business of buying and selling of different types of electronics products in Nizwa region and provided the following data to understand the cash position every month start from January to July. The sales book reported the sales amount for seven months as below: - January February March April May June July 125,000 135,000 148,200 175,800 125,900 129,100 115,200 The sales reported every month including cash sales and credit sales. Cash sales constitute 50% of total sales collected in the month of sales and the balance is credit sales received in two months following the month of sales. The detail of goods purchased in cash during seven months reported in purchase book as below: - January February March April May June July 10,000 12,000 14,000 16,000 18,000 20,000 22,000 Company also purchased goods on credit from different suppliers. The detail of credit purchase from the month January to July is given below: - January February March April May June July 78,500 68,750 62,500 72,600 59,800 49,600 55,000 Cash purchases payable in the month of purchases and credit purchases are payable to supplier in two months following the month of credit purchase. It is also found from the accounting records that the company purchased plant and equipment for RO 15,000 in the month of March and it is payable in three equal instalments starting from April. Tax department has sent a notice to the company to pay taxes of RO 2,000 each in the month from May, June and July. The wages and office expenses are paid in the month following the month in which wages and office expenses incurred. The detail of wages and office expenses is given below: - January February March April May June July Wages 8,000 7,500 6,500 7,980 6,500 8,900 6,600 Office Expenses 5,000 5,750 5,850 5,500 7,500 2,300 4,500 The selling expenses of the company recorded for the seven months are as follows: - January February March April May June July 3,850 2,500 6,500 5,500 6,500 3,300 4,500 The company also incurred administrative expenses for the period January to July. The detail of administrative expenses is given as below: - January February March April May June July 3,500 2,200 4,500 1,600 3,300 3,000 2,300 The company is paying the selling expenses in one month following the month in which such expenses incurred and administration expenses in two months following the month in which such expenses incurred. The cash balance as on 1st April is RO 27,500. Requirement: The Company has requested you to prepare Cash budget for the period of April to june.
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.
Husam Trading Company is in the business of buying and selling of different types of electronics products in Nizwa region and provided the following data to understand the cash position every month start from January to July. The sales book reported the sales amount for seven months as below: -
|
January |
February |
March |
April |
May |
June |
July |
|
125,000 |
135,000 |
148,200 |
175,800 |
125,900 |
129,100 |
115,200 |
The sales reported every month including cash sales and credit sales. Cash sales constitute 50% of total sales collected in the month of sales and the balance is credit sales received in two months following the month of sales.
The detail of goods purchased in cash during seven months reported in purchase book as below: -
|
January |
February |
March |
April |
May |
June |
July |
|
10,000 |
12,000 |
14,000 |
16,000 |
18,000 |
20,000 |
22,000 |
Company also purchased goods on credit from different suppliers. The detail of credit purchase from the month January to July is given below: -
|
January |
February |
March |
April |
May |
June |
July |
|
78,500 |
68,750 |
62,500 |
72,600 |
59,800 |
49,600 |
55,000 |
Cash purchases payable in the month of purchases and credit purchases are payable to supplier in two months following the month of credit purchase.
It is also found from the accounting records that the company purchased plant and equipment for RO 15,000 in the month of March and it is payable in three equal instalments starting from April. Tax department has sent a notice to the company to pay taxes of RO 2,000 each in the month from May, June and July.
The wages and office expenses are paid in the month following the month in which wages and office expenses incurred. The detail of wages and office expenses is given below: -
|
|
January |
February |
March |
April |
May |
June |
July |
|
Wages |
8,000 |
7,500 |
6,500 |
7,980 |
6,500 |
8,900 |
6,600 |
|
Office Expenses |
5,000 |
5,750 |
5,850 |
5,500 |
7,500 |
2,300 |
4,500 |
The selling expenses of the company recorded for the seven months are as follows: -
|
January |
February |
March |
April |
May |
June |
July |
|
3,850 |
2,500 |
6,500 |
5,500 |
6,500 |
3,300 |
4,500 |
The company also incurred administrative expenses for the period January to July. The detail of administrative expenses is given as below: -
|
January |
February |
March |
April |
May |
June |
July |
|
3,500 |
2,200 |
4,500 |
1,600 |
3,300 |
3,000 |
2,300 |
The company is paying the selling expenses in one month following the month in which such expenses incurred and administration expenses in two months following the month in which such expenses incurred.
The cash balance as on 1st April is RO 27,500.
Requirement: The Company has requested you to prepare
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