J Incorporated is preparing their cash budget and the following data were made available: - Sales for the month of January, February and March and April are 300,000; 320,000; 420,000 and 480,000 respectively. - 20% of sales are cash sales. 40% of sales on account are collected in the month of sale and the balance in the following month. - Budgeted purchases for the month is 70% of next month’s sales. 60% of monthly purchases are paid in the month of purchase and the rest are paid in the following month. - Other monthly expenses amount to 35,000, including depreciation of 5,000 At the beginning of January, cash has a balance of 20,000, accounts receivable has a balance of 45,000 while accounts payable has a balance of 40,000. The accounts receivable and accounts payable balance pertains to the sales and purchases the previous month. What is the cash balance at the end of February?
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.
J Incorporated is preparing their
- Sales for the month of January, February and March and April are 300,000; 320,000; 420,000 and 480,000 respectively.
- 20% of sales are cash sales. 40% of sales on account are collected in the month of sale and the balance in the following month.
- Budgeted purchases for the month is 70% of next month’s sales. 60% of monthly purchases are paid in the month of purchase and the rest are paid in the following month.
- Other monthly expenses amount to 35,000, including
At the beginning of January, cash has a balance of 20,000,
What is the cash balance at the end of February?
62,000
82,000
Answer not among the choices
87,000
72,000
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