Pharoah Landscaping Inc. is preparing its budget for the first quarter of 2022. The next step is to prepare a cash receipts schedule and a cash payments schedule. The following information has been collected: 1. 2. 3. (a) Clients usually pay 50% of their fee in the month when the service is provided, 40% the next month, and 10% in the second month after receiving the service. Actual service revenues for 2021 and expected service revenues for 2022 are as follows: November 2021, $91,000; December 2021, $72,000; January 2022, $111,000; February 2022. $119,000; and March 2022, $131,000. The company pays for purchases of landscaping supplies (direct materials) 60% in the month of purchase and 40% the following month. Actual purchases for 2021 and expected purchases for 2022 are: December 2021, $15,000; January 2022, $14,000; February 2022, $16,000; and March 2022, $20,000. Prepare the following schedules for each month in the first quarter of 2022 and for the quarter in total. (1) Schedule of expected collections from clients.
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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