Finch Company, which expects to start operations on January 1, 2018, will sell d

Question

Finch Company, which expects to start operations on January 1, 2018, will sell digital cameras in shopping malls. Finch has budgeted sales as indicated in the following table. The company expects a 10 percent increase in sales per month for February and March. The ratio of cash sales to sales on account will remain stable from January through March. Required a. Complete the sales budget by filling in the missing amounts. b. Determine the amount of sales revenue Finch will report on its first quarter pro forma income statement. Complete this question by entering your answers in the tabs below. Required A Required B Complete the sales budget by filling in the missing amounts. (Round intermediate calculations and final answers to 2 deci places.) Sales Cash sales Sales on account Total budgeted sales $ 152,000 January February March S 38,000 14,000

Explanation / Answer

Ratio of cash sales to credit sales is 1:3

There has been an increase of 10% in sales of February and March.

Therefore cash sales of February will be( cash sales of January+10% of cash sales of January) $38,000+$3,800=$41,800

Credit sales of February will be(credit sales of January+10% of credit sales of January) $1,14,000+$11,400=$1,25,400

--cash sales of march will be (cash sales of February+10%of cash sales of February) $41,800+$4,180=$45,980

Credit sales of march will be( credit sales of February+10%of credit sales of February) $1,25,400+$12,540=$1,37,940

FINCH COMPANY

INCOME STATEMENT

Sales . $5,03,120

  

SALES JANUARY FEBRUARY MARCH Cash sales $38,000 $41,800 $45,980 Credit Sales $1,14,000 $1,25,400 $1,37,940 Total $1,52,000 $1,67,200 $1,83,920

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