Sunshine has provided us with the following forecasted sales for the first 3 mon

Question

Sunshine has provided us with the following forecasted sales for the first 3 months of the year:

Jan

Feb

Mar

Budgeted unit sales

34,000

36,000

27,000

The selling price is expected to be $10 per unit. Based on historical data, 20% of sales are in cash and remainder on account.

Sales on account:

30% of a month’s sales are collected in the month of sale, 60% are collected in the month following sale, and the remaining 10% are collected in the second month following sale. Bad debts can be ignored. November sales totaled $410,000, and December sales totaled $440,000.

Required:

Must show calculations.

Prepare a sales budget by month.

Prepare a schedule of expected cash collections by month.

Jan

Feb

Mar

Budgeted unit sales

34,000

36,000

27,000

Explanation / Answer

sales budget

2)Schedule of expected cash collection:

Jan Feb mar unit sales 34000 36000 27000 selling price 10 10 10 Total sales 340,000 360,000 270,000

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