Information pertaining to Noskey Corporation’s sales revenue follows: November 2018 (Actual) December 2018 (Budgeted) January 2019 (Budgeted) Cash sales $ 145,000 $ 139,000 $ 86,000 Credit sales 318,000 451,000 232,000 Total sales $ 463,000 $ 590,000 $ 318,000 Management estimates 5% of credit sales to be uncollectible. Of collectible credit sales, 60% is collected in the month of sale and the remainder in the month following the month of sale. Purchases of inventory each month include 70% of the next month’s projected total sales (stated at cost) plus 30% of projected sales for the current month (stated at cost). All inventory purchases are on account; 25% is paid in the month of purchase, and the remainder is paid in the month following the month of purchase. Purchase costs are approximately 60% of the selling price. Required: Determine for Noskey: 1. Budgeted cash collections in December 2018 from November 2018 credit sales. 2. Budgeted total cash receipts in January 2019. 3. Budgeted total cash payments in December 2018 for inventory purchases.
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.
Information pertaining to Noskey Corporation’s sales revenue follows:
| November 2018 (Actual) |
December 2018 (Budgeted) |
January 2019 (Budgeted) |
|||||||||
| Cash sales | $ | 145,000 | $ | 139,000 | $ | 86,000 | |||||
| Credit sales | 318,000 | 451,000 | 232,000 | ||||||||
| Total sales | $ | 463,000 | $ | 590,000 | $ | 318,000 | |||||
Management estimates 5% of credit sales to be uncollectible. Of collectible credit sales, 60% is collected in the month of sale and the remainder in the month following the month of sale. Purchases of inventory each month include 70% of the next month’s projected total sales (stated at cost) plus 30% of projected sales for the current month (stated at cost). All inventory purchases are on account; 25% is paid in the month of purchase, and the remainder is paid in the month following the month of purchase. Purchase costs are approximately 60% of the selling price.
Required:
Determine for Noskey:
1. Budgeted cash collections in December 2018 from November 2018 credit sales.
2. Budgeted total cash receipts in January 2019.
3. Budgeted total cash payments in December 2018 for inventory purchases.
Trending now
This is a popular solution!
Step by step
Solved in 4 steps
