The Accountant has not been on vacation for an entire year and decides to take a couple of days off. The Manager of your company asked you to prepare a cash budget, as the Board of Directors are going to meet tomorrow. Your company is a service company and caters to clients with a minimum of $500,000 per annum income. A review of the company’s cash policy revealed that there must be a minimum balance of $100,000. The current opening cash balance is $300,000. The information under review pertains to periods ending June 30th and September 30th 2022. The following information has been collected from other portions of the master budget and elsewhere. Estimated Collections from Clients: 1st period $420,000 2nd period $1,000,000 Estimated Payments: Salaries 1st period $280,000 2nd period $350,000 Overhead costs 1st period $250,000 2nd period $300,000 Selling and Administrative (includes $5,000 depreciation) 1st period $125,000 2nd period $140,000 Other (Expected): Sale of machinery (1st period) $40,000 Interest from investment (2nd period) $60,000 Purchase of new machinery (2nd period) $226,000 Required: Prepare a cash budget for each of the periods in 2022.
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.
The Accountant has not been on vacation for an entire year and decides to take a couple of days off. The Manager of your company asked you to prepare a
Estimated Collections from Clients:
1st period $420,000
2nd period $1,000,000
Estimated Payments:
Salaries
1st period $280,000
2nd period $350,000
1st period $250,000
2nd period $300,000
Selling and Administrative (includes $5,000
1st period $125,000
2nd period $140,000
Other (Expected):
Sale of machinery (1st period) $40,000
Interest from investment (2nd period) $60,000
Purchase of new machinery (2nd period) $226,000
Required: Prepare a cash budget for each of the periods in 2022.
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