Exercise 14-1 Preparing a sales budget Cambridge Company, which expects to start

Question

Exercise 14-1 Preparing a sales budget Cambridge Company, which expects to start operations on January 1, 2018, will sell tablets and accesories in shopping malls. Cambridge 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 SALES JANUARY FEBRUARY MARCH $60,000 Cash Sales Sales on Account Total Budgeted Sales 90,000 $150,000 Required a. Complete the sales budget by filling in the missing amounts. b Determine the amount of sales revenue Cambridge will report on its first quarter pro forma income statement.

Explanation / Answer

Sales January February March Cash sales 60000 66000 72600 Sales on account 90000 99000 108900 Total budgeted sales 150000 165000 181500 b Amount of sales revenue = 150000+165000+181500= 496500

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