ABC Pte Ltd is a retailer of health supplements. As at 1 April 2022, the cash at bank balance is $250,000. The company’s policy is to maintain a minimum cash balance of $100,000. ABC Pte Ltd is developing a cash budget for April, May and June 2022, and the following information was gathered: Cash Receipts 1 Sales revenue for February and March 2022 are $200,000 and $180,000 respectively. The forecasted sales revenue for April, May and June 2022 are $170,000, $220,000 and $280,000 respectively. Historically, 30% of the firm’s sales are in cash, 60% are collected in the next month, and the remaining 10% are collected in the second month following the sale. 2 Monthly rental income received is $60,000. 3 Interest income of $10,000 will be received in May 2022. Cash Disbursements 4 The expected purchases are $150,000, $110,000 and $190,000 for the months of April, May and June 2022 respectively. The company pays all its purchases in the month of purchase. 5 Monthly salaries paid is $70,000. 6 Commission is paid to its salesman at 6% of current month’s sales. 7 Renovation of all retail outlets amounting to $400,000 is scheduled for payment in June 2022. Use the following templates to prepare the cash budget for April, May and June 2022: Projected Cash Disbursements Disbursements Apr $ May $ Jun $ Cash purchase Salaries Commission Renovation Total Cash Disbursements
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.
ABC Pte Ltd is a retailer of health supplements. As at 1 April 2022, the cash at bank balance is $250,000. The company’s policy is to maintain a minimum cash balance of $100,000.
ABC Pte Ltd is developing a
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Cash Receipts |
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1 |
Sales revenue for February and March 2022 are $200,000 and $180,000 respectively. The Historically, 30% of the firm’s sales are in cash, 60% are collected in the next month, and the remaining 10% are collected in the second month following the sale. |
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Monthly rental income received is $60,000.
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Interest income of $10,000 will be received in May 2022. |
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Cash Disbursements |
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The expected purchases are $150,000, $110,000 and $190,000 for the months of April, May and June 2022 respectively. The company pays all its purchases in the month of purchase. |
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Monthly salaries paid is $70,000. |
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Commission is paid to its salesman at 6% of current month’s sales. |
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Renovation of all retail outlets amounting to $400,000 is scheduled for payment in June 2022. |
Use the following templates to prepare the cash budget for April, May and June 2022:
Projected Cash Disbursements
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Disbursements |
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May $ |
Jun $ |
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Cash purchase |
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Salaries |
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Commission |
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Renovation |
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Total Cash Disbursements |
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