y, plant and equipment, net of $572,000 accumulated depreciation 1,094,000 Total assets $ 1,337,000 Liabilities and Stockholders' Equity Accounts payable $ 254,000 Common stock 820,000 Retained earnings 263,000 Total liabilities and stockholders' equity $ 1,337,000
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.
Bramble Corporation is a small wholesaler of gourmet food products. Data regarding the store's operations follow:
- Sales are budgeted at $460,000 for November, $440,000 for December, and $430,000 for January.
- Collections are expected to be 45% in the month of sale and 55% in the month following the sale.
- The cost of goods sold is 80% of sales.
- The company would like to maintain ending merchandise inventories equal to 60% of the next month's cost of goods sold. Payment for merchandise is made in the month following the purchase.
- Other monthly expenses to be paid in cash are $25,200.
- Monthly
depreciation is $16,200. - Ignore taxes.
October 31 |
||
| Assets | ||
| Cash | $ | 20,000 |
| 70,000 | ||
| Merchandise inventory | 153,000 | |
| Property, plant and equipment, net of $572,000 |
1,094,000 | |
| Total assets | $ | 1,337,000 |
| Liabilities and |
||
| Accounts payable | $ | 254,000 |
| Common stock | 820,000 | |
| 263,000 | ||
| Total liabilities and stockholders' equity | $ | 1,337,000 |
Expected cash collections in December are:
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