Macnamara is preparing a cash budget for July. His credit sales are: £ April (actual) 40,000 May (actual) 30,000 June (actual) 20,000 July (estimated) 25,000 His recent debt collection experience has been as follows: Current month’s sales 20% Prior month’s sales 65% Sales two months prior 10% Cash discounts taken 2.5% Bad debts 2.5% How much may Macnamara expect to collect from debtors during July? (A) £19,000 (B) £20,000 (C) £21,000 (D) £24,000
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.
Macnamara is preparing a
£
April (actual) 40,000
May (actual) 30,000
June (actual) 20,000
July (estimated) 25,000
His recent debt collection experience has been as follows:
Current month’s sales 20%
Prior month’s sales 65%
Sales two months prior 10%
Cash discounts taken 2.5%
How much may Macnamara expect to collect from debtors during July?
(A) £19,000
(B) £20,000
(C) £21,000
(D) £24,000
Step by step
Solved in 2 steps
