Question

PROBLEM IV The XYZ Company submitted the following sales forecast for the upcoming fiscal year. 1" Quarter 2 Quarter 3 Quarter 4 Quartet Budgeted unit sales 9,000 10,000 14,000 12.000 Selling price per unit $17.00. Management expects to collect 50% of sales in the quarter in which the sales are made, 35% in the following quarter, and 5% is expected to be uncoliectible Beginning balance of accounts receivable, all of which is expected to be collected in the first quarter, $80,000 Required: 1) Prepare the company's sales budget and schedule of expected cash collection. 2)Assume that the company will prepare a budgeted sales balance sheet as of the 4h Quarter. Compute the accounts receivable as of the end of that Quarter.

Answer 1

XYZ Company Sales Budget Sales Units Selling Price per unit Sales 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter 9000 10000 14000 12000 17 17 17 17 153000 170000 238000 2 04000 Collections For the Quarter ending 4 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter Beginning Balance 80000 1st Quarter 91800 61200 2nd Quarter 102000 68000 3rd Quarter 142800 95200 4th Quarter 122400 Total 171800 163200 2 10800 217600 Totals 80000 153000 170000 238000 122400 763400 Accounts Receivable as of end of Quarter 4 = 204000 - 122400 = 81600 of which 81600 x 0.05/0.4 = 10200 is uncollectible.