Prepare a cash budget for the months of May.
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.
![Blossom Bakery has budgeted sales revenues as follows:
Credit sales
Cash sales
Total sales
April
$45,900
12,240
$58,140
April $34,680
May
37,740
Past experience indicates that 40% of the credit sales will be collected in the month of sale, and the remaining 60% will be collected in
the following month.
Purchases of inventory are all on credit, and 20% will be paid in the month of purchase with the balance paid in the month following
purchase. Budgeted inventory purchases are:
Other budgeted amounts include: (a) selling and administrative expenses of $25,296 each month and (b) dividends of $8,364 to be
paid in May. Included in the selling and administrative expenses is depreciation expense of $1,938.
Beginning Cash Balance
Add
The company wishes to maintain a minimum cash balance of $4,080 at the end of each month. The company borrows money from the
bank at 4% interest if necessary to maintain the minimum cash balance. Borrowed money is repaid in months when there is an excess
cash balance. The beginning cash balance on May 1 was $4,590. Money is borrowed in $102 increments.
Prepare a cash budget for the months of May.
Less
Total Available Cash
May
$48,960
Collections From Customers
Dividends
$65,280
Purchases
16,320
Receipts
Selling and Administrative Expenses
Total Disbursements
Financing
Borrowings
Disbursements
Ending Cash Balance
Excess (Deficiency) of Available Cash Over Disbursements
eTextbook and Media
BlossomBarker
Cash Budget
For the Months of May
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