Use the following information to prepare the September cash budget for PTO Company. Ignore the “Loan activity” section of the budget. Beginning cash balance, September 1, $47,000. Budgeted cash receipts from September sales, $262,000. Direct materials are purchased on credit. Purchase amounts are August (actual), $77,000; and September (budgeted), $103,000. Payments for direct materials follow: 60% in the month of purchase and 40% in the first month after purchase. Budgeted cash payments for direct labor in September, $35,000. Budgeted depreciation expense for September, $3,400. Budgeted cash payment for dividends in September, $57,000. Budgeted cash payment for income taxes in September, $10,900. Budgeted cash payment for loan interest in September, $1,100.
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.
Use the following information to prepare the September
- Beginning cash balance, September 1, $47,000.
- Budgeted cash receipts from September sales, $262,000.
- Direct materials are purchased on credit. Purchase amounts are August (actual), $77,000; and September (budgeted), $103,000. Payments for direct materials follow: 60% in the month of purchase and 40% in the first month after purchase.
- Budgeted cash payments for direct labor in September, $35,000.
- Budgeted
depreciation expense for September, $3,400. - Budgeted cash payment for dividends in September, $57,000.
- Budgeted cash payment for income taxes in September, $10,900.
- Budgeted cash payment for loan interest in September, $1,100.
A Cash Budget represents a detailed plan of Cash Flows (Both Inflow and Outflow) in the future. It is an estimation of Cash flow which is supposed to happen in a business in the future over a specific period of time.
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