NorthWest Itd has prepared its master budget. The sales budget states that sales will be £82,000 in May 2024, £153, 500 in June, £137, 200 in July and £165, 500 in August. 50% of sales will be credit sales. 70% of customers are expected to pay in the month after the sale, 20% in the second month after the sale, while the remaining 10% are expected to be bad debts. Customers who pay in the month after the sale can claim an 8% early settlement discount. What level of sales receipts should be shown in the cash budget for July 2024 (to the nearest £) ? A. £ 57, 627 B. £ 183, 854 C. £ 126, 227 D. £ 122,981 E. £ 81,098 F. £ 115, 254

NorthWest Itd has prepared its master budget. The sales budget states that sales will be £82,000 in May 2024, £153, 500 in June, £137, 200 in July and £165, 500 in August. 50% of sales will be credit sales. 70% of customers are expected to pay in the month after the sale, 20% in the second month after the sale, while the remaining 10% are expected to be bad debts. Customers who pay in the month after the sale can claim an 8% early settlement discount. What level of sales receipts should be shown in the cash budget for July 2024 (to the nearest £) ? A. £ 57, 627 B. £ 183, 854 C. £ 126, 227 D. £ 122,981 E. £ 81,098 F. £ 115, 254

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Concept explainers

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.

Question

NorthWest Itd has prepared its master budget. The sales budget states that sales will be
£82,000 in May 2024, £153, 500 in June, £137,200 in July and £165, 500 in August. 50% of
sales will be credit sales. 70% of customers are expected to pay in the month after the sale,
20% in the second month after the sale, while the remaining 10% are expected to be bad
debts. Customers who pay in the month after the sale can claim an 8% early settlement
discount. What level of sales receipts should be shown in the cash budget for July 2024 (to the
nearest £) ? A. £ 57,627 B. £ 183, 854 C. £ 126, 227 D. £ 122, 981 E. £ 81,098 F. £ 115, 254

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