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 past 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 has to 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.
Q No.2 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 past 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
Required: Prepare
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