The marketing department of Jessi Corporation has subrmitted the following sales
ID: 2576378 • Letter: T
Question
The marketing department of Jessi Corporation has subrmitted the following sales forecast for the upcoming fiscal year (all sales are on account): 4th Quarter 13,100 1st Qu Budgeted unit sales 11,100 12,100 14,100 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. Required: 1-a. Complete the company's sales budget. Jessi Corporation Sales Budget Year 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter Budgeted units sales Selling price per unit Total sales 1-b. Complete the schedule of expected cash collections. Jessi Corporation Schedule of Expected Cash Collections 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter Year Beginning accounts receivable 1st Quarter sales 2nd Quarter sales 3rd Quarter sales 4th Quarter sales Total cash collections 0 O1 Type here to search D 0Explanation / Answer
1.a. Computation of sales budget:
QUARTER
1
2
3
4
TOTAL
Budgeted unit sales
11,100
12,100
14,100
13,100
50,400
Selling price per unit
10
10
10
10
10
Total sales
111,000
121,000
141,000
131,000
504,000
1.b.Computation of Expected cash collections:
QUARTER
1
2
3
4
TOTAL
Beginning accounts receivable
70,400
70,400
1st quarter sales
(111,000*75%) =83,250
(111,000*20%) =22,200
105,450
2nd quarter sales
(121,000*75%) =90,750
(121,000*20%) =24,200
114,950
3rd quarter sales
(141,000*75%) =105,750
(141,000*20%) =28,200
133,950
4th quarter sales
(131,000*75%) =98,250
98,250
Total cash collections
153,650
112,950
129,950
126,450
523,000
2. Production budget for the upcoming fiscal year:
QUARTER
1
2
3
4
TOTAL
Budgeted unit sales
11,100
12,100
14,100
13,100
50,400
Add: desired ending inventory
1,815
2,115
1,965
1,865
7,760
Total units needed
12,915
14,215
16,065
14,965
58,160
Less: Beginning inventory
(1,665)
(1,815)
(2,115)
(1,965)
(7,560)
Required production
11,250
12,400
13,950
13,000
50,600
QUARTER
1
2
3
4
TOTAL
Budgeted unit sales
11,100
12,100
14,100
13,100
50,400
Selling price per unit
10
10
10
10
10
Total sales
111,000
121,000
141,000
131,000
504,000
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