Leaning Tower of Pizza, Inc. is preparing its master budget for its first year of business. It expects to sell 5,000 pizzas at $9 per pizza per month. It expects to collect 90% of the sales revenue in the month of the sale and 10% in the following month. Calculate its accounts receivable balance at the end of its first year.
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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