Toyota & Sons is a family-owned auto-parts store. You are the management accountant of the concern and have been given the task of preparing the cash budget for the business for the quarter ending March 31, 2024. Your data collection has yielded the following: (1) Extracts from the sales and purchases budgets are as follows: Month Sales On Account (II) November 2023-March 2024 November December January February March Cash Sales $151,100 $480,000 $375,000 $145,500 $600,000 $360,000 $159,025 $700,000 $508,000 $169,350 $650,000 $400,000 $176,200 $800,000 $521,000 Purchases An analysis of the records shows that trade receivables (accounts receivable) are settled according to the following credit pattern, in accordance with the credit terms 2/30, n90: 45% in the month of sale 30% in the first month following the sale. 25% in the second month following the sale. Expected purchases include cash purchases of $28,000 in January and $21, 000 in March. All other purchases are on account. Accounts payable are settled as follows, in accordance with the credit terms 4/30, n60: 75% in the month in which the inventory is purchased. 25% in the following month
Toyota & Sons is a family-owned auto-parts store. You are the management accountant of the concern and have been given the task of preparing the cash budget for the business for the quarter ending March 31, 2024. Your data collection has yielded the following: (1) Extracts from the sales and purchases budgets are as follows: Month Sales On Account (II) November 2023-March 2024 November December January February March Cash Sales $151,100 $480,000 $375,000 $145,500 $600,000 $360,000 $159,025 $700,000 $508,000 $169,350 $650,000 $400,000 $176,200 $800,000 $521,000 Purchases An analysis of the records shows that trade receivables (accounts receivable) are settled according to the following credit pattern, in accordance with the credit terms 2/30, n90: 45% in the month of sale 30% in the first month following the sale. 25% in the second month following the sale. Expected purchases include cash purchases of $28,000 in January and $21, 000 in March. All other purchases are on account. Accounts payable are settled as follows, in accordance with the credit terms 4/30, n60: 75% in the month in which the inventory is purchased. 25% in the following month
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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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.
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Transcribed Image Text:Toyota & Sons is a family-owned auto-parts store. You are the management accountant of the
concem and have been given the task of preparing the cash budget for the business for the
quarter ending March 31, 2024. Your data collection has yielded the following:
(1)
(II)
Extracts from the sales and purchases budgets are as follows:
Month
Sales
On
Account
November 2023-March 2024
November
December
January
February
March
Cash
Sales
$151,100
$480,000
$145,500 $600,000
$159,025 $700,000
$169,350 $650,000
$176,200 $800,000
45% in the month of sale
30% in the first month following the sale.
25% in the second month following the sale.
Purchases
An analysis of the records shows that trade receivables (accounts receivable) are settled
according to the following credit pattern, in accordance with the credit terms 2/30, n90:
$375,000
$360,000
$508,000
$400,000
$521,000
75% in the month in which the inventory is purchased.
25% in the following month
Expected purchases include cash purchases of $28,000 in January and $21, 000 in March.
All other purchases are on account. Accounts payable are settled as follows, in accordance
with the credit terms 4/30, n60:
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