Timber Company is in the process of preparing its budget for next year. Cost of goods sold has been estimated at 70 percent of sales. Lumber purchases and payments are to be made during the month preceding the month of sale. Wages are estimated at 15 percent of sales and are paid during the month of sale. Other operating costs amounting to 10 percent of sales are to be paid in the month following the month of sale. Additionally, a monthly lease payment of $64,000 is paid for computer services. Sales revenue is forecast as follows Month Sales Revenue February $220,000 March 260,000 April 270,000 May 310,000 June 290,000 July 330,000 Required Prepare a schedule of cash disbursements for April, May, and June.
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.
Cash Disbursement
Timber Company is in the process of preparing its budget for next year. Cost of goods sold has been estimated at 70 percent of sales. Lumber purchases and payments are to be made during the month preceding the month of sale. Wages are estimated at 15 percent of sales and are paid during the month of sale. Other operating costs amounting to 10 percent of sales are to be paid in the month following the month of sale. Additionally, a monthly lease payment of $64,000 is paid for computer services. Sales revenue is
| Month | Sales Revenue |
|---|---|
| February | $220,000 |
| March | 260,000 |
| April | 270,000 |
| May | 310,000 |
| June | 290,000 |
| July | 330,000 |
Required
Prepare a schedule of cash disbursements for April, May, and June.
Do not use a negative sign with your answers.
| Timber Company | |||
|---|---|---|---|
| Schedule of Cash Disbursements | |||
| April, May, and June | |||
| April | May | June | |
| Lumbers purchases | Answer | Answer | Answer |
| Wages | Answer | Answer | Answer |
| Operating expenses | Answer | Answer | Answer |
| Lease payment | Answer | Answer | Answer |
| Total disbursements | Answer | Answer | Answer |
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