Q8) Prepare a cash budget for the first quarter for Shamz Logistics Inc., given the following data. Management has projected total and credit sales for the first three months of 2016 in the given table. Based on historical data, 40% of credit sales are collected in the month the sales were made, and 60% are collected the next month. Purchases are estimated to be 50% of the next month’s total sales, but are paid for in the month following the order. (Expenditure for inventory in each month is 50% of that month’s sales.) The beginning and target cash balance is $250,000. Month Year Credit sales December 2015 170,000 January 2016 160,000 February 2016 178,000 march 2016 185,000 Item January February March Wages 25,000 29,000 29,000 Rent 2,700 2,700 2,700 Other 1,000 1,200 1,400 Taxes 15,000 -- -- Dividend -- -- 4,000 Cap. Ex. -- 5,000 --
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.
Q8) Prepare a
|
Month |
Year |
Credit sales |
|
December |
2015 |
170,000 |
|
January |
2016 |
160,000 |
|
February |
2016 |
178,000 |
|
march |
2016 |
185,000 |
|
Item |
January |
February |
March |
|
Wages |
25,000 |
29,000 |
29,000 |
|
Rent |
2,700 |
2,700 |
2,700 |
|
Other |
1,000 |
1,200 |
1,400 |
|
Taxes |
15,000 |
-- |
-- |
|
Dividend |
-- |
-- |
4,000 |
|
Cap. Ex. |
-- |
5,000 |
-- |
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