Coyote Loco, Inc., a distributor of salsa, has the following historical collection pattern for its credit sales. 70 percent collected in the month of sale. (LO 9-3, 9-5)15 percent collected in the first month after sale.10 percent collected in the second month after sale.4 percent collected in the third month after sale.1 percent uncollectible. The sales on account have been budgeted for the last seven months as follows: June ............................................................................................................ $ 49,000July ................................................................................................................ 60,000August ......................................................................................................... 70,000September ................................................................................................. 80,000October ....................................................................................................... 90,000November ................................................................................................ 100,000December .................................................................................................. 85,000 Required:1. Compute the estimated total cash collections during October from credit sales.2. Compute the estimated total cash collections during the fourth quarter from sales made on account during the fourth quarter.3. Build a spreadsheet: Construct an Excel spreadsheet to solve both of the preceding requirements. Show how the solution will change if the following information changes: sales in June and July were $50,000 and $65,000, respectively.
Master Budget
A master budget can be defined as an estimation of the revenue earned or expenses incurred over a specified period of time in the future and it is generally prepared on a periodic basis which can be either monthly, quarterly, half-yearly, or annually. It helps a business, an organization, or even an individual to manage the money effectively. A budget also helps in monitoring the performance of the people in the organization and helps in better decision-making.
Sales Budget and Selling
A budget is a financial plan designed by an undertaking for a definite period in future which acts as a major contributor towards enhancing the financial success of the business undertaking. The budget generally takes into account both current and future income and expenses.
Coyote Loco, Inc., a distributor of salsa, has the following historical collection pattern for its credit sales.
70 percent collected in the month of sale. (LO 9-3, 9-5)
15 percent collected in the first month after sale.
10 percent collected in the second month after sale.
4 percent collected in the third month after sale.
1 percent uncollectible.
The sales on account have been budgeted for the last seven months as follows:
June ............................................................................................................ $ 49,000
July ................................................................................................................ 60,000
August ......................................................................................................... 70,000
September ................................................................................................. 80,000
October ....................................................................................................... 90,000
November ................................................................................................ 100,000
December .................................................................................................. 85,000
Required:
1. Compute the estimated total cash collections during October from credit sales.
2. Compute the estimated total cash collections during the fourth quarter from sales made on account during the fourth quarter.
3. Build a spreadsheet: Construct an Excel spreadsheet to solve both of the preceding requirements. Show how the solution will change if the following information changes: sales in June and July were $50,000 and $65,000, respectively.
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