Paddle Up, a retailer of paddle boards, has provided you with the following information: Budgeted Sales (units) February 2022 150 March 2022 110 April 2022 70 a) Paddle Up sells each board for $400 and purchases each board for $250. b) Paddle Up plans to maintain inventory on hand at the end of each month to be 20% of next month's sales volume. You can assume this to be the situation at the end of January 2022. c) 40% of sales are made on cash basis with the remaining 60% - on credit. All credit sales are collected in the month following the sale. d) 50% of inventory purchases are made on cash basis with the remaining 50% - on credit. All credit purchases are paid in the month following the purchase. e) The following cash expenses are incurred on a monthly basis: Rent ($5,300); Wages ($5,400); Utilities ($2,100); Insurance ($600). The business also recognises $3,000 of depreciation expense each month. f) The monthly drawings by the owner of Paddle Up include: $2,000 cash and 1 board for personal use. g) Every month the business pays $900 to pay off its bank loan. h) The opening cash balance on March 1, 2022 is budgeted to be a cash deficit of $4,900. Required: Prepare a cash budget for Paddle Up for the month of March 2022. Paddle Up Cash Budget for the month ending March 31, 2022 March 2022 ($)
Paddle Up, a retailer of paddle boards, has provided you with the following information: Budgeted Sales (units) February 2022 150 March 2022 110 April 2022 70 a) Paddle Up sells each board for $400 and purchases each board for $250. b) Paddle Up plans to maintain inventory on hand at the end of each month to be 20% of next month's sales volume. You can assume this to be the situation at the end of January 2022. c) 40% of sales are made on cash basis with the remaining 60% - on credit. All credit sales are collected in the month following the sale. d) 50% of inventory purchases are made on cash basis with the remaining 50% - on credit. All credit purchases are paid in the month following the purchase. e) The following cash expenses are incurred on a monthly basis: Rent ($5,300); Wages ($5,400); Utilities ($2,100); Insurance ($600). The business also recognises $3,000 of depreciation expense each month. f) The monthly drawings by the owner of Paddle Up include: $2,000 cash and 1 board for personal use. g) Every month the business pays $900 to pay off its bank loan. h) The opening cash balance on March 1, 2022 is budgeted to be a cash deficit of $4,900. Required: Prepare a cash budget for Paddle Up for the month of March 2022. Paddle Up Cash Budget for the month ending March 31, 2022 March 2022 ($)
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.
Question
Transcribed Image Text:Paddle Up, a retailer of paddle boards, has provided you with the following information:
Budgeted Sales (units)
February 2022
150
March 2022
110
April 2022
70
a) Paddle Up sells each board for $400 and purchases each board for $250.
b) Paddle Up plans to maintain inventory on hand at the end of each month to be 20% of next
month's sales volume. You can assume this to be the situation at the end of January 2022.
c) 40% of sales are made on cash basis with the remaining 60% - on credit. All credit sales are
collected in the month following the sale.
d) 50% of inventory purchases are made on cash basis with the remaining 50% - on credit. All
credit purchases are paid in the month following the purchase.
e) The following cash expenses are incurred on a monthly basis: Rent ($5,300); Wages ($5,400);
Utilities ($2,100); Insurance ($600). The business also recognises $3,000 of depreciation
expense each month.
f) The monthly drawings by the owner
Paddle Up include: $2,000 cash and 1 board for
personal use.
g) Every month the business pays $900 to pay off its bank loan.
h) The opening cash balance on March 1, 2022 is budgeted to be a cash deficit of $4,900.
Required:
Prepare a cash budget for Paddle Up for the month of March 2022.
Paddle Up Cash Budget for the month ending March 31, 2022
March 2022 ($)
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