You are required to prepare the cash budget for the two months of January and February 2021. The following is the projected information: December 2020 January 2021 February 2021 Cash sales R221,866 R239,058 R249,441 Receivables collection R188,565 R194,354 R206,276 Cash purchases R8,949 R10,443 R13,354 Operating expenses R47,858 R54,026 R66,970 Credit purchases R76,504 R82,520 R94,445 Operating expenses are paid in the month they are incurred and credit purchases are paid within 30 days of purchase (ie. in the following month). The bank balance on 1 January 2021 is expected to be R62,819 favourable. Equipment to the value of R239,357 is to be purchased on credit in January 2021 and will be paid for in 8 equal instalments, commencing on 1 February 2021. The expected payments total for February 2021 will be:
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.
You are required to prepare the
|
|
December 2020 |
January 2021 |
February 2021 |
|
Cash sales |
R221,866 |
R239,058 |
R249,441 |
|
Receivables collection |
R188,565 |
R194,354 |
R206,276 |
|
Cash purchases |
R8,949 |
R10,443 |
R13,354 |
|
Operating expenses |
R47,858 |
R54,026 |
R66,970 |
|
Credit purchases |
R76,504 |
R82,520 |
R94,445 |
Operating expenses are paid in the month they are incurred and credit purchases are paid within 30 days of purchase (ie. in the following month). The bank balance on 1 January 2021 is expected to be R62,819 favourable. Equipment to the value of R239,357 is to be purchased on credit in January 2021 and will be paid for in 8 equal instalments, commencing on 1 February 2021.
The expected payments total for February 2021 will be:
Step by step
Solved in 2 steps with 1 images
