Oneida Company's operations began in August. August sales were $180,000 and purchases were $120,000. balance for september is $30,500. Oneida's owner approaches the bank for a $102,500 loan to be made on September 2 and repaid on November 30. The bank's loan officer asks the owner to prepare monthly cash budgets. Its budgeted sales, merchandise purchases, and cash payments for other expenses for the next three months follow. Budgeted Sales Merchandise purchases Cash payments Salaries Rent Insurance Repayment of loan Interest on loan September $ 210,000 235,000 30,600 9,000 4,900 1,025 October $445,000 220,000 30,600 9,000 4,900 November $ 480,000 195,000 30,600 9,000 4,900 102,500 1,025 1,025 All sales are on credit where 75% of credit sales are collected in the month following the sale, and the remaining 25% collected in the second month following the sale. All merchandise is purchased on credit; 85% of the balance is paid in the month following a purchase, and the remaining 15% is paid in the second month.
Oneida Company's operations began in August. August sales were $180,000 and purchases were $120,000. balance for september is $30,500. Oneida's owner approaches the bank for a $102,500 loan to be made on September 2 and repaid on November 30. The bank's loan officer asks the owner to prepare monthly cash budgets. Its budgeted sales, merchandise purchases, and cash payments for other expenses for the next three months follow. Budgeted Sales Merchandise purchases Cash payments Salaries Rent Insurance Repayment of loan Interest on loan September $ 210,000 235,000 30,600 9,000 4,900 1,025 October $445,000 220,000 30,600 9,000 4,900 November $ 480,000 195,000 30,600 9,000 4,900 102,500 1,025 1,025 All sales are on credit where 75% of credit sales are collected in the month following the sale, and the remaining 25% collected in the second month following the sale. All merchandise is purchased on credit; 85% of the balance is paid in the month following a purchase, and the remaining 15% is paid in the second month.
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:Oneida Company's operations began in August. August sales were $180,000 and purchases were $120,000. The beginning cash
balance for september is $30,500. Oneida's owner approaches the bank for a $102,500 loan to be made on September 2 and repaid
on November 30. The bank's loan officer asks the owner to prepare monthly cash budgets. Its budgeted sales, merchandise
purchases, and cash payments for other expenses for the next three months follow.
Budgeted
Sales
Merchandise purchases
Cash payments
Salaries
Rent
September
$ 210,000
235,000
Insurance
Repayment of loan
Interest on loan
October
$445,000
220,000
30,600
9,000
4,900
1,025
1. Schedule of cash receipts from sales
2. Schedule of cash payments for direct materials.
3. Cash budget.
November
$ 480,000
195,000
30,600
9,000
4,900
1,025
All sales are on credit where 75% of credit sales are collected in the month following the sale, and the remaining 25% collected in the
second month following the sale. All merchandise is purchased on credit; 85% of the balance is paid in the month following a
purchase, and the remaining 15% is paid in the second month.
30,600
9,000
4,900
102,500
1,025
Required:
Prepare the following for the months of September, October, and November.
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