Develop a cash budget for the next two months using the following information: Monthly sales forecasts are $210,000 and $30,000 for the next two months Sales in the current month were $140,000 80 percent of sales are collected in the month of sale, with the remainder collected in the following month Cost of goods sold equal 70 percent of sales The monthly lease payment is $75,000 The cash position at the end of the current month is $70,000 The target cash balance is $40,000
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.
- Develop a
cash budget for the next two months using the following information:
- Monthly sales
forecasts are $210,000 and $30,000 for the next two months - Sales in the current month were $140,000
- 80 percent of sales are collected in the month of sale, with the remainder collected in the following month
- Cost of goods sold equal 70 percent of sales
- The monthly lease payment is $75,000
- The cash position at the end of the current month is $70,000
- The target cash balance is $40,000
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