The treasurer of Company has accumulated the following budget information for the first two months of the coming year: March $450,000 290,000 Аpril $520,000 Sales. Manufacturing costs Selling and administrative expenses Capital additions 350,000 46,400 41,400 250,000 The company expects to sell about 35% of its merchandise for cash. Of sales on account, 80% are expected to be collected in full in the month of the sale and the remainder in the month following the sale. One-fourth of the manufacturing costs are expected to be paid in the month in which they are incurred and the other three-fourths in the following month. Depreciation, insurance, and property taxes represent $6.400 of the probable monthly selling and administrative expenses. Insurance is paid in February and a $40,000 installment on income taxes is expected to be paid in April. Of the remainder of the selling and administrative expenses, one-half are expected to be paid in the month in which they are incurred and the balance in the following month. Capital additions of $250,000 are expected to be paid in March. Current assets as of March 1 are composed of cash of $45,000 and accounts receivable of $51,000. Current liabilities as of March 1 are composed of accounts payable of $121,500($102,000 for materials purchases and $19,500 for operating expenses). Management desires to maintain a minimum cash balance of $20,000. Q. Prepare a monthly cash budget for March and April.
The treasurer of Company has accumulated the following budget information for the first two months of the coming year: March $450,000 290,000 Аpril $520,000 Sales. Manufacturing costs Selling and administrative expenses Capital additions 350,000 46,400 41,400 250,000 The company expects to sell about 35% of its merchandise for cash. Of sales on account, 80% are expected to be collected in full in the month of the sale and the remainder in the month following the sale. One-fourth of the manufacturing costs are expected to be paid in the month in which they are incurred and the other three-fourths in the following month. Depreciation, insurance, and property taxes represent $6.400 of the probable monthly selling and administrative expenses. Insurance is paid in February and a $40,000 installment on income taxes is expected to be paid in April. Of the remainder of the selling and administrative expenses, one-half are expected to be paid in the month in which they are incurred and the balance in the following month. Capital additions of $250,000 are expected to be paid in March. Current assets as of March 1 are composed of cash of $45,000 and accounts receivable of $51,000. Current liabilities as of March 1 are composed of accounts payable of $121,500($102,000 for materials purchases and $19,500 for operating expenses). Management desires to maintain a minimum cash balance of $20,000. Q. Prepare a monthly cash budget for March and April.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Concept explainers
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
Transcribed Image Text:The treasurer of Company has accumulated the following budget information for the
first two months of the coming year:
March
$450,000
April
$520,000
Sales.
Manufacturing costs
Selling and administrative expenses
Capital additions
290,000
350,000
41,400
46,400
250,000
The company expects to sell about 35% of its merchandise for cash. Of sales on
و ه و و ی م ه م ی ه م ش
گو ن کی وو می ش م
account, 80% are expected to be collected in full in the month of the sale and the
remainder in the month following the sale. One-fourth of the manufacturing costs
are expected to be paid in the month in which they are incurred and the other
وی شو و ی و ی ه و ه و ی و
م م م م مو م م م م مه مه م م
three-fourths in the following month. Depreciation, insurance, and property taxes
represent $6.400 of the probable monthly selling and administrative expenses.
Insurance is paid in February and a $40,000 installment on income taxes is expected
to be paid in April. Of the remainder of the selling and administrative expenses,
one-half are expected to be paid in the month in which they are incurred and the
balance in the following month. Capital additions of $250,000 are expected to be paid
in March.
Current assets as of March 1 are composed of cash of $45,000 and accounts
receivable of $51,000. Current liabilities as of March 1 are composed of accounts
payable of $121,500($102,000 for materials purchases and $19,500 for operating
expenses). Management desires to maintain a minimum cash balance of $20,000.
Q. Prepare a monthly cash budget for March and April.
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