On March 1 of the current year, Spicer Corporation compiled information to prepare a cash budget for March, April, and May. All of the company's sales are made on account. The following information has been provided by Spicer's management: Month January February Credit Sales $ 300,000 (actual) 400,000 (actual) 569,000 (estimated) 718,000 (estimated) 800,000 (estimated) The company's collection activity on credit sales historically has been as follows: Collections in the month of the sale Collections one month after the sale Collections two months after the sale Uncollectible accounts March April May Spicer's total cash expenditures for March, April, and May have been estimated at $1,200,000 (an average of $400,000 per month). Its cash balance on March 1 of the current year is $500,000. No financing or investing activities are anticipated during the second quarter. Required: Compute Spicer's budgeted cash balance at the ends of March, April, and May. Beginning Cash Collections on January Sales Collections on February Sales Collections on March Sales Collections on April Sales Collections on May Sales Total Cash Available Less: Expenditures Ending Cash Balance 50% 30 15 5 $ March 0 $ April 0 $ May 0
On March 1 of the current year, Spicer Corporation compiled information to prepare a cash budget for March, April, and May. All of the company's sales are made on account. The following information has been provided by Spicer's management: Month January February Credit Sales $ 300,000 (actual) 400,000 (actual) 569,000 (estimated) 718,000 (estimated) 800,000 (estimated) The company's collection activity on credit sales historically has been as follows: Collections in the month of the sale Collections one month after the sale Collections two months after the sale Uncollectible accounts March April May Spicer's total cash expenditures for March, April, and May have been estimated at $1,200,000 (an average of $400,000 per month). Its cash balance on March 1 of the current year is $500,000. No financing or investing activities are anticipated during the second quarter. Required: Compute Spicer's budgeted cash balance at the ends of March, April, and May. Beginning Cash Collections on January Sales Collections on February Sales Collections on March Sales Collections on April Sales Collections on May Sales Total Cash Available Less: Expenditures Ending Cash Balance 50% 30 15 5 $ March 0 $ April 0 $ May 0
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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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.
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Transcribed Image Text:On March 1 of the current year, Spicer Corporation compiled information to prepare a cash budget for March, April, and May. All of the
company's sales are made on account. The following information has been provided by Spicer's management:
Month
January
February
Credit Sales
$ 300,000 (actual)
400,000 (actual)
569,000 (estimated)
718,000 (estimated)
800,000 (estimated)
The company's collection activity on credit sales historically has been as follows:
Collections in the month of the sale
Collections one month after the sale
Collections two months after the sale
Uncollectible accounts
March
April
May
Spicer's total cash expenditures for March, April, and May have been estimated at $1,200,000 (an average of $400,000 per month). Its
cash balance on March 1 of the current year is $500,000. No financing or investing activities are anticipated during the second quarter.
Required:
Compute Spicer's budgeted cash balance at the ends of March, April, and May.
Beginning Cash
Collections on January Sales
Collections on February Sales
Collections on March Sales
Collections on April Sales
Collections on May Sales
Total Cash Available
Less: Expenditures
Ending Cash Balance
50%
30
15
5
$
March
0
$
April
0
$
May
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