Please prepare a Cash Receipts section, Cash payments section and use the template below for your Cash Budget.
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.
Archer Electronics Company’s actual sales and purchases for April and May are shown here, along with
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|
Sales |
Purchases |
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April (actual) |
$370,000 |
$155,000 |
|
May (actual) |
350,000 |
145,000 |
|
June (forecast) |
325,000 |
145,000 |
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July (forecast) |
325,000 |
205,000 |
|
August (forecast) |
340,000 |
225,000 |
|
September (forecast) |
380,000 |
220,000 |
The company makes 20 percent of its sales for cash and 80 percent on credit. Of the credit sales, 50 percent are collected in the month after the sale, and 50 percent are collected two months later. Archer pays for 20 percent of its purchases in the month after purchase and 80 percent two months after.
Labor expense equals 15 percent of the current month’s sales.
Archer Electronics’ ending cash balance in May is $22,500. The minimum desired cash balance is $10,500. Prepare a schedule of monthly cash receipts, monthly cash payments, and a complete monthly
Please prepare a Cash Receipts section, Cash payments section and use the template below for your Cash Budget.
Archer Electronics
Cash Budget
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June |
July |
August |
September |
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Cash receipts |
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Cash payments |
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Net |
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Beginning cash balance |
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Cumulative cash balance |
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Monthly borrowing (or repayment) |
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Cumulative loan balance |
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Marketable securities purchased |
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Marketable Securities (Sold) |
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Cumulative marketable securities |
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Ending cash balance |
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