Recently Joeey Bidenless the owner of Not Trump Again Inc. has been looking at his books and realizes he needs help. Joeey has hired a recent graduate at a local university in accounting and wants Muchie Faucciie to prepare a cash budget for January. After examining the company’s records, you find the following: a) Cash balance on June 1st is $13,450. b) Actual sales for November and December are as follows: November December Cash sales $35,000 $45,000 Credit sales $55,000 $85,000 Total sales $90,000 $130,000 c) Credit sales are collected over a 3-month period as follows: i) 50% in the month of sale ii) 30% in the second month iii) 15% in the third month The sales collected in the third month are subject to a 1.25% late fee, but only half of the affected customers pay the late fee, and the owner does not think it is worthwhile to try to collect from the other half. The remaining sales are uncollectible. d) Inventory purchases average 60% of a month’s total sales. Of these purchases, 40% are paid in the month of purchase. The remaining 60% are paid for in the following month. e) Salaries and wages are $54,700 a month including a salary of $15,000 paid to the owner. f) Rent is $3,200 per month. g) Taxes to be paid in June are $3,500. The owner also tells you that he expects cash sales of $32,000 and credit sales of $76,000 for June. No minimum cash balance is required. The owner does not have any short-term loans. a) Prepare a cash collection schedule, cash payment schedule and a cash budget for June.
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.
Recently Joeey Bidenless the owner of Not Trump Again Inc. has been looking at his books and realizes he needs help. Joeey has hired a recent graduate at a local university in accounting and wants Muchie Faucciie to prepare a
a) Cash balance on June 1st is $13,450.
b) Actual sales for November and December are as follows:
November December
Cash sales $35,000 $45,000
Credit sales $55,000 $85,000
Total sales $90,000 $130,000
c) Credit sales are collected over a 3-month period as follows:
i) 50% in the month of sale
ii) 30% in the second month
iii) 15% in the third month
The sales collected in the third month are subject to a 1.25% late fee, but only half of the affected customers pay the late fee, and the owner does not think it is worthwhile to try to collect from the other half. The remaining sales are uncollectible.
d) Inventory purchases average 60% of a month’s total sales. Of these purchases, 40% are paid in the month of purchase. The remaining 60% are paid for in the following month.
e) Salaries and wages are $54,700 a month including a salary of $15,000 paid to the owner.
f) Rent is $3,200 per month.
g) Taxes to be paid in June are $3,500.
The owner also tells you that he expects cash sales of $32,000 and credit sales of $76,000 for June. No minimum cash balance is required. The owner does not have any short-term loans.
a) Prepare a cash collection schedule, cash payment schedule and a cash budget for June.
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