Patrick's Retail Company is planning a cash budget for the next three months. Estimated sales revenue is as follows: Month January. February. Sales Revenue $250,000 350,000 Month March.... April All sales are on credit; 75% is collected during the month of sale, and 25% is collected during the next month. Cost of goods sold is 70% of sales. Payments for merchandise sold are made in the month fol- lowing the month of sale. Operating expenses total $125,000 per month and are paid during the month incurred. The cash balance on February 1 is estimated to be $55,000. Required Prepare monthly cash budgets for February, March, and April. Patrick's Retail Company Cash Budgets February, March, and April February March 55,000 $ 262,500 x 175,000 x 125,000 x 205,000 * $ Cash balance, beginning $ Total Cash receipts Cash available Total disbursements Cash balance, ending $ Sales Revenue $400,000 375,000 April 205,000 x $ 222,500 x 387,500✔ 381,250✔ 245,000 * 280,000 x 125,000 x 125,000 x 222,500 x 198,750 x $
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.
![M22-20. Cash Budget
Patrick's Retail Company is planning a cash budget for the next three months. Estimated sales revenue
is as follows:
Month
January.
February.
Sales Revenue
$250,000
350,000
Cash balance, beginning $.
Total Cash receipts
Cash available
All sales are on credit; 75% is collected during the month of sale, and 25% is collected during the next
month. Cost of goods sold is 70% of sales. Payments for merchandise sold are made in the month fol-
lowing the month of sale. Operating expenses total $125,000 per month and are paid during the month
incurred. The cash balance on February 1 is estimated to be $55,000.
Required
Prepare monthly cash budgets for February, March, and April.
Patrick's Retail Company
Cash Budgets
February, March, and April
February
March
55,000 $
205,000 * $
387,500
245,000 *
125,000 x
222,500 x $
Total disbursements
Cash balance, ending $
Month
March
April
262,500 x
175,000 *
125,000 *
205,000 * $
Sales Revenue
$400,000
375,000
April
222,500 x
381,250
280,000 x
125,000 x
198,750 x](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fce8e774a-e1a5-4025-b58f-3492c5ef1fce%2F851e832c-4b19-40e7-a476-6518034ca8c7%2Fpc4gssj_processed.jpeg&w=3840&q=75)
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