Mast Corporation seeks your assistance in developing cash and other budget information for May, June, and July. At April 30, the company had cash of $12,000, accounts receivable of $859,000, inventories of $112,815, and accounts payable of $36,052. The budget is to be based on the following assumptions. Each month’s sales are billed on the last day of the month. Customers are allowed a 2 percent discount if payment is made within 10 days after the billing date. Receivables are recorded in the accounts at their gross amounts (not net of discounts). The billings are collected as follows: 65 percent within the discount period, 20 percent by the end of the month, and 12 percent by the end of the following month. Three percent is uncollectible. Purchase data are as follows. Of all purchases of merchandise and selling, general, and administrative expenses, 58 percent is paid in the month purchased and the remainder in the following month. The number of units in each month’s ending inventory equals 115 percent of the next month’s units of sales. The cost of each unit of inventory is $9. Selling, general, and administrative expenses, of which $4,000 is depreciation, equal 20 percent of the current month’s sales. Actual and projected sales follow: Dollars Units March $ 151,200 10,800 April 169,400 12,100 May 152,600 10,900 June 159,600 11,400 July 182,000 13,000 August 15,800 13,200 Required: a. Compute the budgeted purchases in dollars for May. b. Compute the budgeted purchases in dollars for June. c. Compute the budgeted cash collections during May. (Do not round intermediate calculations. Round your final answer to nearest whole dollar.) d. Compute the budgeted cash disbursements during June. (Do not round intermediate calculations. Round your final answer to nearest whole dollar.) e. Compute the budgeted number of units of inventory to be purchased during July.
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.
Problem 13-58 (Algo) Budgeted Purchases and Cash Flows (LO 13-4, 5, 6)
Mast Corporation seeks your assistance in developing cash and other budget information for May, June, and July. At April 30, the company had cash of $12,000,
- Each month’s sales are billed on the last day of the month.
- Customers are allowed a 2 percent discount if payment is made within 10 days after the billing date. Receivables are recorded in the accounts at their gross amounts (not net of discounts).
- The billings are collected as follows: 65 percent within the discount period, 20 percent by the end of the month, and 12 percent by the end of the following month. Three percent is uncollectible.
Purchase data are as follows.
- Of all purchases of merchandise and selling, general, and administrative expenses, 58 percent is paid in the month purchased and the remainder in the following month.
- The number of units in each month’s ending inventory equals 115 percent of the next month’s units of sales.
- The cost of each unit of inventory is $9.
- Selling, general, and administrative expenses, of which $4,000 is
depreciation , equal 20 percent of the current month’s sales. - Actual and projected sales follow:
| Dollars | Units | ||
| March | $ | 151,200 | 10,800 |
| April | 169,400 | 12,100 | |
| May | 152,600 | 10,900 | |
| June | 159,600 | 11,400 | |
| July | 182,000 | 13,000 | |
| August | 15,800 | 13,200 | |
Required:
a. Compute the budgeted purchases in dollars for May.
b. Compute the budgeted purchases in dollars for June.
c. Compute the budgeted cash collections during May. (Do not round intermediate calculations. Round your final answer to nearest whole dollar.)
d. Compute the budgeted cash disbursements during June. (Do not round intermediate calculations. Round your final answer to nearest whole dollar.)
e. Compute the budgeted number of units of inventory to be purchased during July.
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