Problem #7: Operating Budgets Marker Products, Inc. sells all of its products on credit. The company expects to collect 65%of sales in the quarter of sale and 35% the quarter following the sale. Accounts receivable at the end of last year totaled $3,000,000, all of which will be collected in the first quarter of the coming year. Marker's sales budget shows the following projected sales revenues: Quarter 1: $8,800,000 Quarter 2: $11,000,000 Quarter 3: $11,440,000 Quarter 4: $10,560,000 Required: Prepare a budget for cash collections from sales for each of the four quarters.
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.
Problem #7: Operating Budgets
Marker Products, Inc. sells all of its products on credit. The company expects to collect 65%of sales in the quarter of sale and 35% the quarter following the sale. Accounts receivable at the end of last year totaled $3,000,000, all of which will be collected in the first quarter of the coming year. Marker's sales budget shows the following projected sales revenues:
Quarter 1: $8,800,000
Quarter 2: $11,000,000
Quarter 3: $11,440,000
Quarter 4: $10,560,000
Required:
Prepare a budget for cash collections from sales for each of the four quarters.
Trending now
This is a popular solution!
Step by step
Solved in 2 steps
