Mary Mouch is in the process of preparing budgets for the period October to December 2019. The following information has been provided to assist in the budgeting process: 1. Budgeted monthly sales revenue is as follows: October N$ 40 000 November N$ 70 000 December N$ 50 000 January 2020 N$ 45 000 Sales are 20% cash and 80% credit. Credit sales are collected over a three month periodd, 15% in the month of sale, 70% in the month following sale and 15% in the second month following sale. Bad debts of 5% are anticipated on all credit sales. Total revenue in August amounts to N$30 000 and September's total sales revenue amounts to N$ 36 000. 2. Cost of sales is expected to amount to 60% of sales revenue each month. 3. The business maintains its closing inventory levels at 75% of the following month's cost of sales. Inventory at the begining of October is expected to amount to N$ 18 000. 4. 50% of inventory purchased is paid in the month of purchase. The remaining 50% is paid for in the month following purchase. At the 30th September amounts owed for purchases are N$ 11 700. 5. A grant of N$ 20 000 is expected to be received in mid- October 6. A van which cost N$ 8000 when purchased second hand three years ago is expected to be sold in December 2019 for N$ 3000. At this time the expected net book value of the van is N$ 1800 7. Equipment costing N$ 4500 will be purchased and paid for in November. The equipment will be depreciated on a straight line basis over three years. 8. Operating expenses are paid as incurred. These have been estimated as follows: October N$ 12 800 November N$ 18 900 December N$ 14 600 The above figures include depreciation on existing assets of N$ 2000 per month. 9. The cash balance on 1st October is expected to amount to N$ 8000 Required: (a) Calculate the purchases figure for each month from October 2013 to December 2019. (b) Prepare a cash budget on a monthly basis and in total for the period October 2019 to December 2019
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.
Mary Mouch is in the process of preparing budgets for the period October to December 2019. The following information has been provided to assist in the budgeting process:
1. Budgeted monthly sales revenue is as follows:
| October | N$ 40 000 |
| November | N$ 70 000 |
| December | N$ 50 000 |
| January 2020 | N$ 45 000 |
Sales are 20% cash and 80% credit. Credit sales are collected over a three month periodd, 15% in the month of sale, 70% in the month following sale and 15% in the second month following sale.
2. Cost of sales is expected to amount to 60% of sales revenue each month.
3. The business maintains its closing inventory levels at 75% of the following month's cost of sales. Inventory at the begining of October is expected to amount to N$ 18 000.
4. 50% of inventory purchased is paid in the month of purchase. The remaining 50% is paid for in the month following purchase. At the 30th September amounts owed for purchases are N$ 11 700.
5. A grant of N$ 20 000 is expected to be received in mid- October
6. A van which cost N$ 8000 when purchased second hand three years ago is expected to be sold in December 2019 for N$ 3000. At this time the expected net book value of the van is N$ 1800
7. Equipment costing N$ 4500 will be purchased and paid for in November. The equipment will be
8. Operating expenses are paid as incurred. These have been estimated as follows:
| October | N$ 12 800 |
| November | N$ 18 900 |
| December | N$ 14 600 |
The above figures include depreciation on existing assets of N$ 2000 per month.
9. The cash balance on 1st October is expected to amount to N$ 8000
Required:
(a) Calculate the purchases figure for each month from October 2013 to December 2019.
(b) Prepare a
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