Required: prepare budget of purchase for each of the first three months of 2011 prepare separate budgets of cash receipts and disbursements and cash budget for each of the first three months of 2011 prepare a budget income statement for the first quarter of 2011
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.
Q.1 budget schedules: the following data apply to the HASF Hardware Store and its 2011 budget
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Jan |
$200,000 |
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Feb |
$160,000 |
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Mar |
$180,000 |
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Apr |
$45,000 |
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Balance Sheet Data |
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December 31,2010 |
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cash |
$80,000 |
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November sales |
45000 |
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December sales |
50000 |
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Inventory |
54000 |
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Account payable(merchandise) |
27000 |
Other data are as follows:
- Sales are on credit with 30% of sales collected in the same month after sale ,70% in the second month after sale
- Cost of goods sold is 70% of sales
- Other variables costs are 40% of sales paid in the month incurred
- Inventories are to be 65% of next month’s budgeted sales requirements
- Fixed expenses are equal to other variable expense per month; all require cash
- Credit time period for purchases are 30 days
Required:
- prepare budget of purchase for each of the first three months of 2011
- prepare separate budgets of cash receipts and disbursements and
cash budget for each of the first three months of 2011 - prepare a
budget income statement for the first quarter of 2011
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