1. Airpro Company paid its employees a total of $600,000 in salaries last year. Next year, they will increase those employees' wages by 20% and hire six new employees, who will receive a base salary of $25,000. Required: Prepare an Incremental Budget
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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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- Cash DisbursementTimber 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 RequiredPrepare 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…Hoppy Company requires a minimum cash balance of $3,500. When the company expects a cash deficiency, it borrows the exact amount required on the first of the month. Expected excess cash is used to repay any amounts owed. Interest owed from the previous month's principal balance is paid on the first of the month at completed the budgeting process for the first quarter for cash receipts and cash payments for all expenses except interest. |per year. The company has already Hoppy Company Cash Budget For the Three Months Ended March 31 January February March Total Beginning cash balance 24 3,500 Cash receipts 19,000 27,500 42,000 88,500 Cash available 22,500 Cash payments: All expenses except interest 34,000 35,000 39,000 108,000 Interest expense Total cash payments 34,000 Ending cash balance before fiOnancing Minimum cash balance desired (3,500) (3,500) (3,500) (3,500) (Complete all input fields. Enter a "0" for any zero balances. Round all amounts entered into the cash budget to the…Kayak Company budgeted the following cash receipts (excluding cash receipts from loans received) and cash payments (excluding cash payments for loan principal and interest payments) for the first three months of next year. Cash Receipts Cash payments January $ 520,000 $ 463,500 February 401,500 345,000 March 465,000 527,000 Kayak requires a minimum cash balance of $50,000 at each month-end. Loans taken to meet this requirement charge 1%, interest per month, paid at each month-end. The interest is computed based on the beginning balance of the loan for the month. Any preliminary cash balance above $50,000 is used to repay loans at month-end. The company has a cash balance of $50,000 and a loan balance of $100,000 at January 1. Prepare monthly cash budgets for January, February, and March. (Negative balances and Loan repayment amounts (if any) should be indicated with minus sign.)
- ABC buys insurance for its fleet of delivery trucks. The cost is $18,000 per year and is paid in two instalments, on January 1 and July 1 of each year. The amount of cash disbursement that will appear on the February cash budget is: O$1,500 $9,000 $18,000Company L charges all operating expenses to credit. They pay 70% of their accounts payable in the month following the expense, and 30% two months following the expense. Expenses (all paid for on credit) for the last three months have been provided below: August: $80,000 September: $120,000 October: $94,000 What is the budgeted cash outflow for October?Kayak Company budgeted the following cash receipts (excluding cash receipts from loans received) and cash payments (excluding cash payments for loan principal and interest payments) for the first three months of next year. January February March Cash Receipts $ 516,000 408,000 455,000 Kayak requires a minimum cash balance of $50,000 at each month-end. Loans taken to meet this requirement charge 1%, Interest per month, paid at each month-end. The interest is computed based on the beginning balance of the loan for the month. Any preliminary cash balance above $50,000 is used to repay loans at month-end. The company has a cash balance of $50,000 and a loan balance of $100,000 at January 1. Prepare monthly cash budgets for January, February, and March. (Negative balances and Loan repayment amounts (if any) should be Indicated with minus sign.) Beginning cash balance Total cash available Total cash payments Preliminary cash balance Loan activity Ending cash balance Cash payments $ 458,400…
- The Lowville Company has budgeted the following data for November: • Sales of $1,728,300, all in cash. • A cash balance on November 1 of $72,000. • Cash disbursements (other than interest) during November of $1,740,000. • A minimum cash balance of $90,000 at the end of each month. The company has 2% open line of credit for $100,000. All borrowing will take place at the beginning of the month. The November interest will be paid in cash when repayment is made. The excess (deficiency) of cash available over disbursements for November will be: A. $(11,700) B. $ (29,700) C. $60,300 D. $72,000 1. 2. The amount of cash needed to be borrowed on November 1 to cover all cash disbursements and to obtain the desired November 30 cash balance is: A. $11,700 B. $18,000 C. $29,700 D. $30,000 The minimum cash balance the Lowville Company should have in order to make both repayment and interest payment in December should be closest to: A. $18,060 B. $29,800 C. $90,600 D. $119,800Kayak Company budgeted the following cash receipts (excluding cash receipts from loans received) and cash payments (excluding cash payments for loan principal and interest payments) for the first three months of next year. January February March Cash Receipts $ 525,000 400,000 450,000 Kayak requires a minimum cash balance of $30,000 at each month-end. Loans taken to meet this requirement charge 1% interest per month, paid at each month-end. The interest is computed based on the beginning balance of the loan for the month. Any preliminary cash balance above $30,000 is used to repay loans at month-end. The company has a cash balance of $30,000 and a loan balance of $60,000 at January 1. Prepare monthly cash budgets for January, February, and March. (Negative balances and Loan repayment amounts (if any) should be indicated with minus sign.) Beginning cash balance Add: Cash receipts Total cash available Less: Cash payments for Interest on loan All items excluding interest Total cash…Kayak Company budgeted the following cash receipts (excluding cash receipts from loans received) and cash payments (excluding cash payments for loan principal and interest payments) for the first three months of next year. Cash Receipts $ 521,000 Cash payments $ 467,800 January February March 410,500 458,000 357,300 531,000 Kayak requires a minimum cash balance of $50,000 at each month-end. The company can borrow money at a monthly interest rate of 1%, paid on the last day of each month. The interest is computed based on the beginning balance of the loan for the month. Any preliminary cash balance above $50,000 is used to repay loans at month-end. The company has a cash balance of $50,000 and a loan balance of $100,000 at January 1. Prepare monthly cash budgets for January, February, and March. (Negative balances and Loan repayment amounts (if any) should be indicated with minus sign.) KAYAK COMPANY Cash Budget January February March Beginning cash balance $ 50,000 Total cash available…
- From the following information, prepare a monthly cash budget for the three months ending 31st December 2023. Month June July August September October November December Materials Wages 1,800 650 2,000 750 2,400 750 2,250 750 2.300 800 2,500 2,600 900 1,000 The credit terms are as follows: 10% of sales are in cash. 3 months to debtors. 2 months from Creditors. Sales 3,000 3,250 3,500 3,750 4,000 4,250 4,500 The lag in payment for wages is 1/4 month and 1/2 month for overheads. The cash and bank balance on 1st October is expected to be RO 1,500. Other information is given as follows: Admin. Selling, etc 160 160 175 175 200 200 225 Production 225 225 250 300 300 350 350 Preference share dividends @ 5% on RO 50,000 are to be paid on 1st December. Calls on 250 equity shares @RO 2 per share are expected on 1st November. Dividends from investments amounting to RO 250 are expected on 31st December. Income tax (advance) is to be paid in December RO 1,500 Plant and machinery are to be installed…Kayak Company budgeted the following cash receipts (excluding cash receipts from loans received) and cash payments (excluding cash payments for loan principal and interest payments) for the first three months of next year. January February March Cash Receipts $ 518,000 Kayak requires a minimum cash balance of $50,000 at each month-end. Loans taken to meet this requirement charge 1%, interest per month, paid at each month-end. The interest is computed based on the beginning balance of the loan for the month. Any preliminary cash balance above $50,000 is used to repay loans at month-end. The company has a cash balance of $50,000 and a loan balance of $100,000 at January 1. Beginning cash balance Total cash available Prepare monthly cash budgets for January, February, and March. Note: Negative balances and Loan repayment amounts (if any) should be indicated with minus sign. 402,000 476,000 Total cash payments Preliminary cash balance Loan activity Ending cash balance Cash payments $…Kayak Company budgeted the following cash receipts (excluding cash receipts from loans received) and cash payments (excluding cash payments for loan principal and Interest payments) for the first three months of next year. January February March Cash Receipts $ 522,000 402,000 465,000 Kayak requires a minimum cash balance of $40,000 at each month-end. Loans taken to meet this requirement charge 1%, Interest per month, paid at each month-end. The Interest is computed based on the beginning balance of the loan for the month. Any preliminary cash balance above $40,000 is used to repay loans at month-end. The company has a cash balance of $40,000 and a loan balance of $80,000 at January 1. Prepare monthly cash budgets for January, February, and March. Note: Negative balances and Loan repayment amounts (if any) should be indicated with minus sign. Beginning cash balance Add: Cash receipts Total cash available Total cash payments Preliminary cash balance Loan activity Interest on loan Ending…