j. Tanner's supervisor is working on the company's budgeted balance sheet for Quarter 2, and she delegates budgeting for the ending A/R balance to Tanner. He gets right to work, realizing that ne can't determine the June 30 A/R balance without a schedule of cash receipts, and all of that hinges on the sales forecast. He gathers information about the company's collection policies and trends, along with relevant information from the sales department, as follows. • Sales volume is expected as follows: April, 625 units; May, 800 units; June, 750 units; and July, 840 units. • Average selling price is expected to be $65 per unit. • Historically, 25% of each month's sales are cash sales. • 50% of each month's sales are credit card/debit card sales, subject to a 2% merchant fee. All appropriate receipts are deposited in the company's account in the month of sale. • 25% of each month's sales are trade credit sales; 30% of trade credit customers pay their balance in the month of the sale, 65% pay in full the month following the sale, and 5% of trade credit sales go uncollected. • The A/R balance on March 31 was $10,000, reflecting the remaining collectible amount from March credit sales. Required a. Help Tanner prepare the sales forecast for Quarter 2 (outlining amounts for each month and for the quarter overall). b. Prepare the Quarter 2 schedule of cash receipts (outlining amounts for each month and for the quarter overall). c. Determine the collectible (or net) A/R balance at the end of Quarter 2. d. How will Tanner's work on the above components assist his supervisor with the budgeted balance sheet for the same period?
j. Tanner's supervisor is working on the company's budgeted balance sheet for Quarter 2, and she delegates budgeting for the ending A/R balance to Tanner. He gets right to work, realizing that ne can't determine the June 30 A/R balance without a schedule of cash receipts, and all of that hinges on the sales forecast. He gathers information about the company's collection policies and trends, along with relevant information from the sales department, as follows. • Sales volume is expected as follows: April, 625 units; May, 800 units; June, 750 units; and July, 840 units. • Average selling price is expected to be $65 per unit. • Historically, 25% of each month's sales are cash sales. • 50% of each month's sales are credit card/debit card sales, subject to a 2% merchant fee. All appropriate receipts are deposited in the company's account in the month of sale. • 25% of each month's sales are trade credit sales; 30% of trade credit customers pay their balance in the month of the sale, 65% pay in full the month following the sale, and 5% of trade credit sales go uncollected. • The A/R balance on March 31 was $10,000, reflecting the remaining collectible amount from March credit sales. Required a. Help Tanner prepare the sales forecast for Quarter 2 (outlining amounts for each month and for the quarter overall). b. Prepare the Quarter 2 schedule of cash receipts (outlining amounts for each month and for the quarter overall). c. Determine the collectible (or net) A/R balance at the end of Quarter 2. d. How will Tanner's work on the above components assist his supervisor with the budgeted balance sheet for the same period?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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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.
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Transcribed Image Text:5.
Tanner's supervisor is working on the company's budgeted balance sheet for Quarter 2, and she delegates budgeting for the ending A/R balance to Tanner. He gets right to work,
realizing that ne can't determine the June 30 A/R balance without a schedule of cash receipts, and all of that hinges on the sales forecast. He gathers information about the company's collection
policies and trends, along with relevant information from the sales department, as follows.
• Sales volume is expected as follows: April, 625 units; May, 800 units; June, 750 units; and July, 840 units.
• Average selling price is expected to be $65 per unit.
• Historically, 25% of each month's sales are cash sales.
• 50% of each month's sales are credit card/debit card sales, subject to a 2% merchant fee. All appropriate receipts are deposited in the company's account in the month of sale.
• 25% of each month's sales are trade credit sales; 30% of trade credit customers pay their balance in the month of the sale, 65% pay in full the month following the sale, and 5% of trade credit
sales go uncollected.
• The A/R balance on March 31 was $10,000, reflecting the remaining collectible amount from March credit sales.
Required
a. Help Tanner prepare the sales forecast for Quarter 2 (outlining amounts for each month and for the quarter overall).
b. Prepare the Quarter 2 schedule of cash receipts (outlining amounts for each month and for the quarter overall).
c. Determine the collectible (or net) A/R balance at the end of Quarter 2.
d. How will Tanner's work on the above components assist his supervisor with the budgeted balance sheet for the same period?
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