Lindor Enterprises projects sales for the first three months of the year to be: $10,200 in January, $12,200 in February, and $13,000 in March. Cash receipts are expected to be: $8,460 in January, $11,450 in February, and $12,500 in March. They anticipate the following cash payments: Lindor Enterprises January February March Direct materials purchased $3,700 $4,200 $4,700 Direct labor costs $3,100 $4,000 $3,600 Depreciation on plant $600 $600 $600 Utilities for plant $650 $650 $650 Property taxes on plant $120 $120 $120 Depreciation on office $560 $560 $560 Utilities for office $360 $360 $360 Property taxes on office $170 $170 $170 Office salaries $2,800 $2,800 $2,800 All costs are paid in the month incurred except: direct materials, which are paid in the month following the purchase; utilities, which are paid in the month after incurred; and property taxes, which are prepaid for the year on January 2. The Accounts Payable and Utilities Payable accounts have a zero balance on January 1. Also, Lindor Enterprises beginning cash balance is $3,000 and they desire to maintain a minimum ending cash balance of $3,000. Lindor Enterprises borrows cash as needed at the beginning of each month in increments of $1,000 and repays the amounts borrowed in increments of $1,000 at the beginning of months when excess cash is available. The interest rate on borrowed amounts is 5% per year. Interest is paid at the beginning of the month on the outstanding balance from the previous month. Complete a Cash Budget for Lindor Enterprises.
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.
Lindor Enterprises projects sales for the first three months of the year to be: $10,200 in January, $12,200 in February, and $13,000 in March. Cash receipts are expected to be: $8,460 in January, $11,450 in February, and $12,500 in March.
They anticipate the following cash payments:
| Lindor Enterprises | January | February | March |
|---|---|---|---|
| Direct materials purchased | $3,700 | $4,200 | $4,700 |
| Direct labor costs | $3,100 | $4,000 | $3,600 |
| Depreciation on plant | $600 | $600 | $600 |
| Utilities for plant | $650 | $650 | $650 |
| Property taxes on plant | $120 | $120 | $120 |
| Depreciation on office | $560 | $560 | $560 |
| Utilities for office | $360 | $360 | $360 |
| Property taxes on office | $170 | $170 | $170 |
| Office salaries | $2,800 | $2,800 | $2,800 |
All costs are paid in the month incurred except: direct materials, which are paid in the month following the purchase; utilities, which are paid in the month after incurred; and property taxes, which are prepaid for the year on January 2. The Accounts Payable and Utilities Payable accounts have a zero balance on January 1.
Also, Lindor Enterprises beginning cash balance is $3,000 and they desire to maintain a minimum ending cash balance of $3,000. Lindor Enterprises borrows cash as needed at the beginning of each month in increments of $1,000 and repays the amounts borrowed in increments of $1,000 at the beginning of months when excess cash is available. The interest rate on borrowed amounts is 5% per year. Interest is paid at the beginning of the month on the outstanding balance from the previous month.
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