The marketing department of Jessi Corporation has submitted the following sales
ID: 2485331 • Letter: T
Question
The marketing department of Jessi Corporation has submitted the following sales forecast for the upcoming fiscal year (all sales are on account):
The selling price of the company’s product is $10 per unit. Management expects to collect 75% of sales in the quarter in which the sales are made, 20% in the following quarter, and 5% of sales are expected to be uncollectible. The beginning balance of accounts receivable, all of which is expected to be collected in the first quarter, is $70,400.
The company expects to start the first quarter with 1,665 units in finished goods inventory. Management desires an ending finished goods inventory in each quarter equal to 15% of the next quarter’s budgeted sales. The desired ending finished goods inventory for the fourth quarter is 1,865 units.
The marketing department of Jessi Corporation has submitted the following sales forecast for the upcoming fiscal year (all sales are on account):
Explanation / Answer
Schedule of expected cash collection 1st quarter 2nd quarter 3rd quarter 4th quarter Year Budgeted unit sales 11100 12100 14100 13100 50400 Selling price 10 10 10 10 10 Budgeted sales value 111000 121000 141000 131000 504000 Cash sales - 75% 83250 90750 105750 98250 378000 Collection - following month 70400 22200 24200 28200 145000 Total cash collection 153650 112950 129950 126450 523000 1st quarter 2nd quarter 3rd quarter 4th quarter Year Beginning accounts receivable 70400 70400 1st quarter sales 83250 22200.00 105450 2nd quarter sales 90750 24200 114950 3rd quarter sales 105750 28200 133950 4th quarter sales 98250 98250 153650 112950 129950 126450 523000
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