HOPPY COMPANY Cash Budget For the Three Months Ended March 31 January February March Total Beginning balance Cash receipts 3,500 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 balance before financing Minimum cash balance desired (3,500) (3,500) (3,500) (3,500) Projected cash eNcess (deficiency) Financing: Borrowing Principal repayments Total effects of financing Ending cash balance
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.
Preparing the financial budget——
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 14% per year. The company has already completed the budgeting process for the first quarter for cash receipts and cash payments for all expenses except interest. Hoppy does not have any outstanding debt on January l. Complete the cash budget for the first quarter for Hoppy Company. Round interest expense to the nearest whole dollar.
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