Copley Paper Supply expects to have the sales and expenses shown for May, June, and July. The company expects to receive 70% of the sales in the month of the sale, 25% thefollowing month, and 5% to be uncollectible. The company’s policy to pay manufacturing cost includes 65% in the month incurred and 35% the following month. All other costs are paid in the month incurred. In addition, the company must pay an income tax payment in July, which the company estimates will be 10% of total sales for the quarter. The company will also receive interest revenue of $1,200 in June. Prepare the cash budget for the three months if the cash balance as of May 1, 2015, totaled $102,000. The company requires a $100,000 minimum 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.
Copley Paper Supply expects to have the sales and expenses shown for May, June,
and July. The company expects to receive 70% of the sales in the month of the sale,
25% thefollowing month, and 5% to be uncollectible. The company’s policy to pay
manufacturing cost includes 65% in the month incurred and 35% the following
month. All other costs are paid in the month incurred. In addition, the company must
pay an income tax payment in July, which the company estimates will be 10% of total
sales for the quarter. The company will also receive interest revenue of $1,200 in
June.
Prepare the
totaled $102,000. The company requires a $100,000 minimum cash balance.
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