Required information Problem 14-21 (Algo) Cash budget-part 1 LO 14-4, 14-7 [The following information applies to the questions displayed below.] PrimeTime Sportswear is a custom imprinter that began operations six months ago. Sales have exceeded management's most optimistic projections. Sales are made on account and collected as follows: 52% in the month after the sale is made and 47% in the second month after sale. Merchandise purchases and operating expenses are paid as follows: In the month during which the merchandise is purchased or the cost is incurred In the subsequent month PrimeTime Sportswear's income statement budget for each of the next four months, newly revised to reflect the success of the firm, follows: Sales Cost of goods sold: Beginning inventory Purchases Cost of goods available for sale Less: Ending inventory Cost of goods sold Gross profit Operating expenses Operating income July $ 42,800 $ 5,800 37,400 $ 43,200 (14,380) $ 28,820 $ 13,980 11,000 $ 2,980 August $ 54,100 $ 14,380 44,000 $ 58,380 (20,550) $ 37,830 $ 16,270 12,300 $ 3,970 September $ 67,800 71% 29% $ 20,550 49,400 $ 69,950 (21,910) $ 48,040 $ 19,760 14,800 $ 4,960 October $ 58,600 $ 21,910 33,100 $ 55,010 (20, 090) $ 34,920 $ 23,680 16,300 $ 7,380 Cash on hand June 30 is estimated to be $40,390. Collections of June 30 accounts receivable were estimated to be $20,100 in July and $14,750 in August. Payments of June 30 accounts payable and accrued expenses in July were estimated to be $24,240.
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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