TAP & Brothers Third-Quarter Budget Data July August September Credit Sales 256,167 262,962 282,872 Credit Purchases 97,465 111,565 137,292 Wages, Taxes, and Expenses 26,506 31,621 33,707 Interest 7,239 7,773 8,091 Equipment Purchases 54,832 61,271 0 The company predicts that 4% of its credit sales will never be collected, 30% of its sales will be collected in the month of the sale, and the remaining 66% will be collected in the following month. Credit purchases will be paid in the month following the purchase. In June, credit sales were $138,282, and credit purchases were $102,770 July’s beginning cash is $184,797 If TAP maintains a policy of always keeping a minimum cash balance of $75,000 as a buffer against uncertainty and forecasting errors, what is the cash surplus/deficit at the end of the quarter (i.e., end of September)?
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.
Accounting
Consider the following third-quarter budget data for TAP & Brothers:
|
TAP & Brothers Third-Quarter Budget Data |
|||
|
|
July |
August |
September |
|
Credit Sales |
256,167 |
262,962 |
282,872 |
|
Credit Purchases |
97,465 |
111,565 |
137,292 |
|
Wages, Taxes, and Expenses |
26,506 |
31,621 |
33,707 |
|
Interest |
7,239 |
7,773 |
8,091 |
|
Equipment Purchases |
54,832 |
61,271 |
0 |
The company predicts that 4% of its credit sales will never be collected, 30% of its sales will be collected in the month of the sale, and the remaining 66% will be collected in the following month. Credit purchases will be paid in the month following the purchase.
- In June, credit sales were $138,282, and credit purchases were $102,770
- July’s beginning cash is $184,797
If TAP maintains a policy of always keeping a minimum cash balance of $75,000 as a buffer against uncertainty and
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