The garden supply company has the following business transaction estimates relating to the final quarter of 2020. October November December Total Sales – See note 1. 110,000 140,000 160,000 Receipts from Accounts Receivable To calculate - See note 2. Wages 35,000 35,000 40,000 Office Furniture 10,000 Lease Prepayment for 2021 6,000 Administrative Expenses 5,000 5,000 7,000 Accrued Expenses 8,000 Depreciation on Office Furniture 8,000 9,000 9,000 Maturing of Term Deposit 10,000 Credit Purchases 60,000 70,000 80,000 Payments of Accounts Payable To calculate - See note 3. Drawings 3,000 3,000 3,000 Votes 1. 30% of total sales are cash sales. 70% of total sales are on credit. 2. Actual receipts from Accounts Receivable are 80% of the previous month's credit sales and the balance of 20% owing is received in the following month. For example if we had credit sales of $100,000 in January, we would expect to receive $80,000 in February and $20,000 in March. Actual credit sales were $60,000 in both August and September 2020. 3. Credit purchases on Accounts Payable are paid 60% in the month of purchase and the remaining 40% in the month following. Credit purchases in September 2020 were $50,000. 4. Garden Supply's cash balance at 1 October 2020 was $555.
The garden supply company has the following business transaction estimates relating to the final quarter of 2020. October November December Total Sales – See note 1. 110,000 140,000 160,000 Receipts from Accounts Receivable To calculate - See note 2. Wages 35,000 35,000 40,000 Office Furniture 10,000 Lease Prepayment for 2021 6,000 Administrative Expenses 5,000 5,000 7,000 Accrued Expenses 8,000 Depreciation on Office Furniture 8,000 9,000 9,000 Maturing of Term Deposit 10,000 Credit Purchases 60,000 70,000 80,000 Payments of Accounts Payable To calculate - See note 3. Drawings 3,000 3,000 3,000 Votes 1. 30% of total sales are cash sales. 70% of total sales are on credit. 2. Actual receipts from Accounts Receivable are 80% of the previous month's credit sales and the balance of 20% owing is received in the following month. For example if we had credit sales of $100,000 in January, we would expect to receive $80,000 in February and $20,000 in March. Actual credit sales were $60,000 in both August and September 2020. 3. Credit purchases on Accounts Payable are paid 60% in the month of purchase and the remaining 40% in the month following. Credit purchases in September 2020 were $50,000. 4. Garden Supply's cash balance at 1 October 2020 was $555.
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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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.
Question
Prepare a month by month cash budget for the quarter ending 31 December 2020 and comment briefly on the monthly cash position.
Transcribed Image Text:The garden supply company has the following business transaction estimates
relating to the final quarter of 2020.
October
$
November
$
December
$
Total Sales – See note 1.
110,000
140,000
160,000
Receipts from Accounts Receivable
To calculate See note 2.
Wages
35,000
35,000
40,000
Office Furniture
10,000
Lease Prepayment for 2021
6,000
Administrative Expenses
5,000
5,000
7,000
Accrued Expenses
8,000
Depreciation on Office Furniture
8,000
9,000
9,000
Maturing of Term Deposit
10,000
Credit Purchases
60,000
70,000
80,000
Payments of Accounts Payable
To calculate - See note 3.
Drawings
3,000
3,000
3,000
Notes
1. 30% of total sales are cash sales. 70% of total sales are on credit.
2. Actual receipts from Accounts Receivable are 80% of the previous month's credit
sales and the balance of 20% owing is received in the following month. For
example if we had credit sales of $100,000 in January, we would expect to receive
$80,000 in February and $20,000 in March. Actual credit sales were $60,000 in
both August and September 2020.
3. Credit purchases on Accounts Payable are paid 60% in the month of purchase and
the remaining 40% in the month following. Credit purchases in September 2020
were $50,000.
4. Garden Supply's cash balance at 1 October 2020 was $555.
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