Barnes Company expects to begin operating on January 1. The company's master budget contained the following operating expense budget: January February March Salary Expenses; $36,000 $36,000 $36,000 Sales commissions, 5% of sales 30,000 32,000 24,000 Utilities: 2,800 2,800 2,800 Depreciation on store equipment 1,000 1,000 1,000 Rent 7,200 7,200 7,200 Miscellaneous: 1,800 1,800 1,800 Total operating expenses $78,800 $80,800 $72,800 Sales commissions are paid in cash in the month following the month in which the expense is recognized. All other expense items requiring cash payment are paid in the month in which they are recognized. The amount of accumulated depreciation appearing on the company's March 31 pro forma balance sheet is:
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.
Barnes Company expects to begin operating on January 1. The company's master budget contained the following operating expense budget:
January February March Salary
Expenses;
$36,000 $36,000 $36,000 Sales commissions, 5% of sales 30,000 32,000 24,000
Utilities:
2,800 2,800 2,800
Depreciation on store equipment 1,000 1,000 1,000
Rent
7,200 7,200 7,200 Miscellaneous:
1,800 1,800 1,800
Total operating expenses
$78,800 $80,800 $72,800
Sales commissions are paid in cash in the month following the month in which the expense is recognized. All other expense items requiring cash payment are paid in the month in which they are recognized. The amount of accumulated depreciation appearing on the company's March 31 pro forma balance sheet is:
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