Pharoah Company expects to have a cash balance of $101,200 on January 1, 2022. These are the relevant monthly budget data for the first two months of 2022. 1. Collections from customers: January $156,200, February $321,200. 2. Payments to suppliers: January $88,000, February $165,000. 3. Wages: January $66,000, February $88,000. Wages are paid in the month they are incurred. 4. Administrative expenses: January $46,200, February $52,800. These costs include depreciation of $2,200 per month. All other costs are paid as incurred. 5. Selling expenses: January $33,000, February $44,000. These costs are exclusive of depreciation. They are paid as incurred. 6. Sales of short-term investments in January are expected to realize $26,400 in cash. Pharoah Company has a line of credit at a local bank that enables it to borrow up to $55,000. The company wants to maintain a minimum monthly cash balance of $44,000.
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.
Pharoah Company expects to have a cash balance of $101,200 on January 1, 2022. These are the relevant monthly budget data for the first two months of 2022.
| 1. | Collections from customers: January $156,200, February $321,200. | |
| 2. | Payments to suppliers: January $88,000, February $165,000. | |
| 3. | Wages: January $66,000, February $88,000. Wages are paid in the month they are incurred. | |
| 4. | Administrative expenses: January $46,200, February $52,800. These costs include |
|
| 5. | Selling expenses: January $33,000, February $44,000. These costs are exclusive of depreciation. They are paid as incurred. | |
| 6. | Sales of short-term investments in January are expected to realize $26,400 in cash. Pharoah Company has a line of credit at a local bank that enables it to borrow up to $55,000. The company wants to maintain a minimum monthly cash balance of $44,000. |
Prepare a
Trending now
This is a popular solution!
Step by step
Solved in 2 steps with 1 images
