Kupa Ltd has approached to assist in preparing a cash budget. The annual and projected sales are provided below. date Oct 2020 Nov 2020 Dec 2020 Jan 2021 Feb 2021 Mar 2021 April 2021 May 2021 June 2021 July 2021 Sales (in ‘000’) 2000 1970 1900 2100 2200 2240 2000 2160 2180 2200 45% of cash sales are on cash basis. Of credit sales, 35% is collected in the month of sale, 40% one month after sale and 20% two months from sales Gross profit margin is 20%. Goods purchased in a given month are sold in the following month after the month of purchase. Payment of purchases is as follows, 60% is paid one month after purchase and the remainder two months after purchase. Required Compute Cash collected from sales in month of January and February 2021 Cash paid to suppliers of goods in the months of January and February 2021
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.
Kupa Ltd has approached to assist in preparing a
|
date |
Oct 2020 |
Nov 2020 |
Dec 2020 |
Jan 2021 |
Feb 2021 |
Mar 2021 |
April 2021 |
May 2021 |
June 2021 |
July 2021 |
|
Sales (in ‘000’) |
2000 |
1970 |
1900 |
2100 |
2200 |
2240 |
2000 |
2160 |
2180 |
2200 |
- 45% of cash sales are on cash basis. Of credit sales, 35% is collected in the month of sale, 40% one month after sale and 20% two months from sales
- Gross profit margin is 20%. Goods purchased in a given month are sold in the following month after the month of purchase. Payment of purchases is as follows, 60% is paid one month after purchase and the remainder two months after purchase.
Required
Compute
- Cash collected from sales in month of January and February 2021
- Cash paid to suppliers of goods in the months of January and February 2021
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