The Star Company expects to have $37,500 cash in hand on the 1st of April 2005. You are required to prepare a cash budget covering the three months April to June 2005. The following information is supplied to you. Sales Purchases Wages Factory Expenses Office Expenses Selling Expenses February March April May June 75,000 84,000 90,000 120,000 135,000 45,000 48,000 52,500 60,000 60,000 9,000 9,750 10,500 13,500 14,250 7,500 8,250 9,000 11,250 14,000 6,000 6,000 6000 6000 7,000 4,500 4,500 5,250 6,570 7,000 Other Information: The period of credit allowed by suppliers is 2 months. 20% of sales are for cash and the period of credit allowed to customers for credit sales is one month. Lag in payment of all expenses is one month. Income tax of $57,500 is due to be paid on June 15, 2005. The company is to pay $15,000 dividends to shareholders and $22,500 bonus to workers in the month of April. Plant has been ordered and is expected to be received and paid for in May. It will cost $120,000.
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 Star Company expects to have $37,500 cash in hand on the 1st of April 2005. You are required to prepare a
The following information is supplied to you.
|
|
Sales
|
Purchases |
Wages |
Factory Expenses |
Office Expenses |
Selling Expenses |
|
February March April May June
|
75,000 84,000 90,000 120,000 135,000 |
45,000 48,000 52,500 60,000 60,000 |
9,000 9,750 10,500 13,500 14,250 |
7,500 8,250 9,000 11,250 14,000 |
6,000 6,000 6000 6000 7,000 |
4,500 4,500 5,250 6,570 7,000 |
Other Information:
- The period of credit allowed by suppliers is 2 months.
- 20% of sales are for cash and the period of credit allowed to customers for credit sales is one month.
- Lag in payment of all expenses is one month.
- Income tax of $57,500 is due to be paid on June 15, 2005.
- The company is to pay $15,000 dividends to shareholders and $22,500 bonus to workers in the month of April.
- Plant has been ordered and is expected to be received and paid for in May. It will cost $120,000.
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