Long & Short Company developed the following data for the preparation December 2021 budget: Expected Beginning Cash balance December 1: $12,300 Expected total sales in December: $120,000. Sales are 25% cash and 75% on account. Credit
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.
Long & Short Company developed the following data for the preparation December 2021 budget:
Expected Beginning Cash balance December 1: $12,300
Expected total sales in December: $120,000. Sales are 25% cash and 75% on account. Credit sales are collected as 30 percent in the month of sale,
60 percent in the following month, and 10 percent in the second month following the sale.
Actual credit sales for the previous months were:
November, $60,000
October, $50,000 and
September $40,000
The expected purchase of inventory for December is $45,000. Actual November purchases were $34,000, October $32,000 and for September are $40,000. 20% of the purchases are paid in the month of purchase, 70% in the following month and the remainder in the second month following purchases. The following are other cash expenses:
December salaries are $28,400, utilities are $1,900, selling and administrative expenses will be $47,000 of which
Required:
A). Calculate the anticipated cash receipts from sales in December.
B). Calculate the anticipated total cash available in December.
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