Mahsuri Pte Ltd is preparing budgets for the second half of Year 2021. The profit forecasts for the 6 months of Year 2021 are given below: July $ August $ Sept $ Oct $ Nov $ Dec $ Sales 40000 48000 50000 60000 80000 100000 Cost: 20000 24000 25000 30000 40000 50000 Materials 4000 4800 5000 6000 8000 10000 Wages 17000 18600 19000 21000 25000 29000 Overheads 41000 47400 49000 57000 73000 89000 Profit/(Loss) (1000) 600 1000 3000 7000 11000 5% cash discount will be allowed for receipts in month of sale. 50% of customers are expected to pay in the month of sale; 30% will take one month’s credit, and 20% will take 2 months' credit. Materials are purchased and used in the month in which goods are sold. Creditors for materials are paid in the following month. 75% of wages are paid in the month incurred. The remainder (25%) is paid in the following month. Overheads include a monthly charge of $2,000 for depreciation. 10% of the creditors for overheads are paid in the same month incurred. The remainder (90%) is paid in the following month. The company is having a new building constructed and the first instalment of $10,000 will be paid in October. Sales for the last TWO (2) months of first half year 2021 were: May - $60,000 June - $50,000 In June 2021 materials purchased were $25,000. Wages were $5,000 and overheads were $16,000 (including $2,000 depreciation). The expected cash balance at beginning of July 2021 is $1,250. Required: 1. Prepare the Cash Budget for each of the last 6 months of Year 2021. 2. Comment on the cash budget results above.
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.
Mahsuri Pte Ltd is preparing budgets for the second half of Year 2021. The profit
| July $ | August $ | Sept $ | Oct $ | Nov $ | Dec $ | |
| Sales | 40000 | 48000 | 50000 | 60000 | 80000 | 100000 |
| Cost: | 20000 | 24000 | 25000 | 30000 | 40000 | 50000 |
| Materials | 4000 | 4800 | 5000 | 6000 | 8000 | 10000 |
| Wages | 17000 | 18600 | 19000 | 21000 | 25000 | 29000 |
| Overheads | ||||||
| 41000 | 47400 | 49000 | 57000 | 73000 | 89000 | |
| (1000) | 600 | 1000 | 3000 | 7000 | 11000 |
-
5% cash discount will be allowed for receipts in month of sale. 50% of customers are expected to pay in the month of sale; 30% will take one month’s credit, and 20% will take 2 months' credit.
-
Materials are purchased and used in the month in which goods are sold. Creditors for materials are paid in the following month.
-
75% of wages are paid in the month incurred. The remainder (25%) is paid in the following month.
-
Overheads include a monthly charge of $2,000 for depreciation. 10% of the creditors for overheads are paid in the same month incurred. The remainder (90%) is paid in the following month.
-
The company is having a new building constructed and the first instalment of $10,000 will be paid in October.
-
Sales for the last TWO (2) months of first half year 2021 were:
May - $60,000
June - $50,000
-
In June 2021 materials purchased were $25,000. Wages were
$5,000 and overheads were $16,000 (including $2,000 depreciation).
-
The expected cash balance at beginning of July 2021 is $1,250.
Required:
1. Prepare the
Cash Budget for each of the last 6 months of Year 2021.2. Comment on the cash budget results above.
Trending now
This is a popular solution!
Step by step
Solved in 3 steps with 10 images
