Lindor Enterprises projects sales for the first three months of the year to be: $10,400 in January, $12,500 in February, and $13,100 in March. Cash receipts are expected to be: $8,580 in January, $11,820 in February, and $12,700 in March. They anticipate the following cash payments: Lindor Enterprises January February March Direct materials purchased $3,600 $4,200 $4,700 Direct labor costs $3,300 $4,000 $3,500 Depreciation on plant $570 $570 $570 Utilities for plant $650 $650 $650 Property taxes on plant $170 $170 $170 Depreciation on office $580 $580 $580 Utilities for office $350 $350 $350 Property taxes on office $180 $180 $180 Office salaries $3,000 $3,000 $3,000 All costs are paid in the month incurred except: direct materials, which are paid in the month following the purchase; utilities, which are paid in the month after incurred; and property taxes, which are prepaid for the year on January 2. The Accounts Payable and Utilities Payable accounts have a zero balance on January 1. Also, Lindor Enterprises beginning cash balance is $3,100 and they desire to maintain a minimum ending cash balance of $3,100. Lindor Enterprises borrows cash as needed at the beginning of each month in increments of $900 and repays the amounts borrowed in increments of $900 at the beginning of months when excess cash is available. The interest rate on borrowed amounts is 5% per year. Interest is paid at the beginning of the month on the outstanding balance from the previous month. Complete a Cash Budget for Lindor Enterprises. Lindor EnterprisesCash BudgetFor the Quarter Ending March 31 January February March Total Beginning cash balance Cash receipts Cash available Cash payments: Purchases of direct materials Direct labor Manufacturing overhead Selling and administrative expenses Interest expense Total cash payments Ending cash balance before financing Minimum cash balance desired Projected cash excess (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.
They anticipate the following cash payments:
Lindor Enterprises | January | February | March |
---|---|---|---|
Direct materials purchased | $3,600 | $4,200 | $4,700 |
Direct labor costs | $3,300 | $4,000 | $3,500 |
$570 | $570 | $570 | |
Utilities for plant | $650 | $650 | $650 |
Property taxes on plant | $170 | $170 | $170 |
Depreciation on office | $580 | $580 | $580 |
Utilities for office | $350 | $350 | $350 |
Property taxes on office | $180 | $180 | $180 |
Office salaries | $3,000 | $3,000 | $3,000 |
All costs are paid in the month incurred except: direct materials, which are paid in the month following the purchase; utilities, which are paid in the month after incurred; and property taxes, which are prepaid for the year on January 2. The Accounts Payable and Utilities Payable accounts have a zero balance on January 1.
Also, Lindor Enterprises beginning cash balance is $3,100 and they desire to maintain a minimum ending cash balance of $3,100. Lindor Enterprises borrows cash as needed at the beginning of each month in increments of $900 and repays the amounts borrowed in increments of $900 at the beginning of months when excess cash is available. The interest rate on borrowed amounts is 5% per year. Interest is paid at the beginning of the month on the outstanding balance from the previous month.
Complete a
Lindor EnterprisesCash BudgetFor the Quarter Ending March 31
January | February | March | Total | |
---|---|---|---|---|
Beginning cash balance | ||||
Cash receipts | ||||
Cash available | ||||
Cash payments: | ||||
Purchases of direct materials | ||||
Direct labor | ||||
Manufacturing |
||||
Selling and administrative expenses | ||||
Interest expense | ||||
Total cash payments | ||||
Ending cash balance before financing | ||||
Minimum cash balance desired | ||||
Projected cash excess (deficiency) | ||||
Financing: | ||||
Borrowing | ||||
Principal repayments | ||||
Total effects of financing | ||||
Ending cash balance |
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