Royal Cigar Company is preparing a budget for cash collections. Its sales for November andDecember are estimated as $90,000 and $100,000, respectively. Past practice indicates that sales inany given month are collected as follows: month of sale, 75%; month following the month of sale,20%; uncollectible accounts, 5%. The company allows a 2% discount for cash collections in themonth of sale. What is the net cash estimated to be collected in December?
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.
Royal Cigar Company is preparing a budget for cash collections. Its sales for November and
December are estimated as $90,000 and $100,000, respectively. Past practice indicates that sales in
any given month are collected as follows: month of sale, 75%; month following the month of sale,
20%; uncollectible accounts, 5%. The company allows a 2% discount for cash collections in the
month of sale. What is the net cash estimated to be collected in December?
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