A cash budget, by quarters, is given below for a retail company. (000 omitted). The company requires a minimum cash balance of P5,000 to start each quarter. Quarter 1 2 3 4 Year Cash balance, beginning..................... P9 P? P? P? P? Add collections from customers….. ? ? 125 ? 391 Total cash available………………. 85 ? ? ? ? Less disbursements: Purchase of inventory….................. 40 58 ? 32 ? Operating expenses…………... ? 42 54 ? 180 Equipment purchases…................ 10 8 8 ? 36 Dividends…………………….. 2 2 2 2 ? Total disbursement……………….. ? 110 ? ? ? Excess (deficiency) of cash available Or disbursements… ...................... (3) ? 30 ? ? Financing: Borrowings……………………. ? 20 - - ? Repayments (including interest)*.. - - (?) (7) (?) Total financing……………………. ? ? (?) (?) ? Cash balance, ending…………….... P? P? P? P? P? *Interest will total P4, 000 for the year. Required: Fill in the missing amounts in the table above.
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.
Exercise 7 (
A cash budget, by quarters, is given below for a retail company. (000 omitted).
The company requires a minimum cash balance of P5,000 to start each quarter.
Quarter
1 2 3 4 Year
Cash balance, beginning..................... P9 P? P? P? P?
Add collections from customers….. ? ? 125 ? 391
Total cash available………………. 85 ? ? ? ?
Less disbursements:
Purchase of inventory….................. 40 58 ? 32 ?
Operating expenses…………... ? 42 54 ? 180
Equipment purchases…................ 10 8 8 ? 36
Dividends…………………….. 2 2 2 2 ?
Total disbursement……………….. ? 110 ? ? ?
Excess (deficiency) of cash available
Or disbursements… ...................... (3) ? 30 ? ?
Financing:
Borrowings……………………. ? 20 - - ?
Repayments (including interest)*.. - - (?) (7) (?)
Total financing……………………. ? ? (?) (?) ?
Cash balance, ending…………….... P? P? P? P? P?
*Interest will total P4, 000 for the year.
Required:
Fill in the missing amounts in the table above.
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