The opening cash balance on 1st Jan was expected to be Rs. 30,000. The sales budget was as follows: November Rs. 80,000 December 90,000 January 75,000 February 75000 March 80000 Analysis of records shows that debtors settle according to the following pattern: 60% within the month of sales, 25% the month following, 15% the month following. Extracts from the purchases budget were as follows: December Rs.60000 January 55000 February 45000 March 55000 All purchases are on credit and experience shows that 90% are settled in the month of purchases and the balance settled the month after. Wages are Rs.15000 per month and overheads of Rs.20,000 per month (including Rs.5000 depreciation) are settled monthly. Taxation of Rs.8000 must be settled in February and company will receive settlement of an insurance claim of Rs.25000 in March. Required: Prepare cash budget for Jan, Feb, and March
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 opening cash balance on 1st Jan was expected to be Rs. 30,000. The sales budget was as follows:
November Rs. 80,000
December 90,000
January 75,000
February 75000
March 80000
Analysis of records shows that debtors settle according to the following pattern: 60% within the month of sales, 25% the month following, 15% the month following.
Extracts from the purchases budget were as follows:
December Rs.60000
January 55000
February 45000
March 55000
All purchases are on credit and experience shows that 90% are settled in the month of purchases and the balance settled the month after.
Wages are Rs.15000 per month and overheads of Rs.20,000 per month (including Rs.5000
Required: Prepare cash budget for Jan, Feb, and March
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