Martinez, Inc. has budgeted sales revenues as follows: Credit sales Cash sales Total sales Past experience indicates that 60% of the credit sales will be collected in the month of sale and the remaining 40% will be collected in the following month. Purchases of inventory are all on account with 50% is paid in the month of purchase and 50% paid in the month following purchase. Budgeted inventory purchases are as follows: June July August (a) June July August $130,000 $ 94,000 $135,000 98,000 254,000 192,000 $233,000 $384,000 $ 286,000 Other cash disbursements budgeted: (a) selling and administrative expenses of $50,000 each month, (b) dividends of $109,000 will be paid in July, and (c) purchase of equipment in August for $37,000 cash. The company's policy is to maintain a minimum cash balance of $50,000 at the end of each month. The company borrows money from the bank at 6% interest if necessary to maintain the minimum cash balance. Borrowed money is repaid in months when there is an excess cash balance. The beginning cash balance on July 1 was $50,000. Assume that borrowed money in this case is for one month. June $302,000 July 220,000 Prepare separate schedules for expected collections from customers and expected payments for purchases of inventory. (Do not leave any answer field blank. Enter O for amounts) August 109,000 Credit sales Schedule of Expected Collections from Customers $ July 130000 254000 78000 $ August 94000 192000 56400

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…

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…