aring the cash budget for the business for the fourth quarter of 2021. It is customary for the business to borrow money during this quarter. Extracts from the sales and purchases budgets are as follows: Month cash sales sales on account purchases August $85,000 $640,000 $420,000 September $70,000 $550,000 $550,000 October $88,550 $600,000 $500,000 November $77,160 $800,000 $600,000 December $174,870 $500,000 $450,000 i) An analysis of the records shows that trade receivables are settled according to the following credit pattern, in accordance with the credit terms 4/30, n90: 50% in the month of sale 30% in the first month following the sale 20% in the second month following the sale Required The business needs to have a sense of its future cashflows and therefore requires the preparation of the following: 1. A schedule of budgeted cash collections for trade receivables (sales on account) for each of the months October to December.
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.
The
preparing the
business to borrow money during this quarter. Extracts from the sales and purchases budgets are
as follows:
Month cash sales sales on account purchases
August $85,000 $640,000 $420,000
September $70,000 $550,000 $550,000
October $88,550 $600,000 $500,000
November $77,160 $800,000 $600,000
December $174,870 $500,000 $450,000
i) An analysis of the records shows that trade receivables are settled according to the following credit pattern, in accordance with the credit terms 4/30, n90:
50% in the month of sale
30% in the first month following the sale
20% in the second month following the sale
Required
The business needs to have a sense of its future cashflows and therefore requires the
preparation of the following:
1. A schedule of budgeted cash collections for trade receivables (sales on account) for each of
the months October to December.
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