RovniakReeds, a manufacturer of saxophone, oboe, and clarinet reeds, has project
ID: 2567012 • Letter: R
Question
RovniakReeds, a manufacturer of saxophone, oboe, and clarinet reeds, has projected sales to be $900,000in October,$960,000in November, $1,050,000 in December, and $922,000in January. Rovniak'ssales are 25%cash and 75%credit. The company's collection history indicates that credit sales are collected as follows:
20% in the month of the sale
65% in the month after the sale
10% two months after the sale
5% are never collected
Requirements
1. Prepare a sales budget for all four months, showing the breakdown between cash and credit sales.
2. Prepare a cash collection budget for December and January. Round all answers up to the nearest dollar.
Requirement 1. Prepare a sales budget for all four months, showing the breakdown between cash and credit sales.
Rovniak Reeds
Sales Budget
For the Four Months Ended January
October
November
December
January
Cash sales
Credit sales
Total sales
Requirement 2. Prepare a cash collection budget for December and January. Round all answers up to the nearest dollar.
Rovniak Reeds
Budgeted Cash Collections from Customers
For the Months of December and January
December
January
Cash sales
Collection of credit sales:
20% of current month credit sales
65% of prior month credit sales
10% of credit sales two months ago
Total collection of credit sales
Total cash collections
20% in the month of the sale
65% in the month after the sale
10% two months after the sale
5% are never collected
k Reeds, a man actre of saxophone oo e and dar at eeds nas pro acted sales to te SS00 00 in n the month of the sele dober 9 0 0 n Noverbe S1 0 0 01n ecember, and 22 000 n January Ro eks sales are 25% cash and 75credit The con ar s colect n story ndicatas that cre t salas are collected as 65% n the month afier the selE 10% two months (tor tho salo 5% are never colloctod 1. Prepane a sales budget foral tourmonts, showing the breactoun between cash and creot sales 2. Prepene a cast colecton budetfor December end Janugry iund al answers up to the nearest colar Requirement 1 . Prepae "les budget 10r ' tour mont shoonp the braaeoown bewsen cesnavd ciaot sales Rovniak Reeds ales Dudget Gash salts ctal zale Budgeted C h Collections from customer Cash sel6Explanation / Answer
Sales budget For the four months ended January October November December January Cash sales(25%) 225000 240000 262500 230500 Credit sales(75%) 675000 720000 787500 691500 Total sales 900000 960000 1050000 922000 Cash collection budget For the four months of december and january December January Cash sales 262500 230500 Collection of credit sales: 20% of current month credit sales 157500 138300 65% of prior month credit sales 468000 511875 10% of credit sales two months ago 67500 72000 Total collection of credit sales 693000 722175 Total cash collections 955500 952675
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