Thern Company's budgeted sales for the coming year are $40,500,000 of which 80% are expected to be credit sales at terms of n/30. Thern estimates that a proposes relaxation of credit standards would increase credit sales by 20% and increase the average collection
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.
Thern Company's budgeted sales for the coming year are $40,500,000 of which 80% are expected to be credit sales at terms of n/30. Thern estimates that a proposes relaxation of credit standards would increase credit sales by 20% and increase the average collection period form 30 days to 40 days.
Based on a 360-day year, the proposed relaxation of credit standards would result in an expected increase in the average accounts receivable balance of how much?
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