The Uthred Company, a merchandising firm, has planned the following sales for the next four months: March April May June Total budgeted Sales $50,000 $70,000 $90,000 $60,000 Sales are made 40% for cash and 60% on account. From experience, the company has learned that a month’s sales on account are collected according to the following pattern: Month of sale.......................................................... 70% First month following month of sale...................... 20% Second month following month of sale.................. 8% Uncollectible.......................................................... 2% The company requires a minimum cash balance of $10,000 to start a month. Required Compute the budgeted cash receipts for May. Assume the following budgeted data for May: Purchases...................................................... $52,000 Selling and administrative expenses............ $12,000 Depreciation................................................. $8,000 Equipment purchases..................................... $25,000 Cash balance, beginning of May.................. $8,000 Using this data, along with your answer to part (1) above, prepare a cash budget in good form for May (May Only). Clearly show any borrowing needed during the month. The company can borrow in any dollar amount, but will not pay any interest until the following month.
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 Uthred Company, a merchandising firm, has planned the following sales for the next four months:
|
|
March |
April |
May |
June |
|
Total budgeted Sales |
$50,000 |
$70,000 |
$90,000 |
$60,000 |
Sales are made 40% for cash and 60% on account. From experience, the company has learned that a month’s sales on account are collected according to the following pattern:
- Month of sale.......................................................... 70%
- First month following month of sale...................... 20%
- Second month following month of sale.................. 8%
- Uncollectible.......................................................... 2%
The company requires a minimum cash balance of $10,000 to start a month.
Required
- Compute the budgeted cash receipts for May.
- Assume the following budgeted data for May:
- Purchases...................................................... $52,000
- Selling and administrative expenses............ $12,000
- Depreciation................................................. $8,000
- Equipment purchases..................................... $25,000
- Cash balance, beginning of May.................. $8,000
Using this data, along with your answer to part (1) above, prepare a
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