Preparing Cash Receipts and Cash Payments Budgets E33-18 Martin Clothing Company is a retail company that sells hiking and other outdoor gear specially made for the desert heat. It sells to individuals as well as local companies that coordinate adventure Page 1282getaways in the desert for tourists. The following information is available for several months of the current year: Month Sales Purchases Cash Expenses Paid May $120,000 $90,000 $24,000 June 115,000 95,000 31,000 July 160,000 150,000 38,250 August 145,000 80,000 34,700 The majority of Martin’s sales (70 percent) are cash, but a few of the excursion companies purchase on credit. Of the credit sales, 40 percent are collected in the month of sale and 60 percent are collected in the following month. All of Martin’s purchases are on account with 55 percent paid in the month of purchase and 45 percent paid the following month. Required: 1. Prepare a schedule of cash receipts for July and August. 2. Prepare a schedule of cash payments for July and August
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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Preparing Cash Receipts and Cash Payments Budgets E33-18 |
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Martin Clothing Company is a retail company that sells hiking and other outdoor gear specially made for the desert heat. It sells to individuals as well as local companies that coordinate adventure Page 1282getaways in the desert for tourists. The following information is available for several months of the current year:
The majority of Martin’s sales (70 percent) are cash, but a few of the excursion companies purchase on credit. Of the credit sales, 40 percent are collected in the month of sale and 60 percent are collected in the following month. All of Martin’s purchases are on account with 55 percent paid in the month of purchase and 45 percent paid the following month. Required: 1. Prepare a schedule of cash receipts for July and August. 2. Prepare a schedule of cash payments for July and August. |
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