Reeds, a manufacturer of saxophone, oboe, and clarinet reeds, has projected sales to be $896,000 in October, $956,000 in November, $1,045,000 in December, and $928,000 in January. Rovniak's sales are 20% cash and 80% credit. The company's collection history indicates that credit sales are collected as follows: 25% in the month of the sale 60% in the month after the sale 12% two months after the sale 3% are never collected 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: 25% of current month credit sales 60% of prior month credit sales 12% of credit sales two months ago Total collection of credit sales Total cash collections
Reeds, a manufacturer of saxophone, oboe, and clarinet reeds, has projected sales to be $896,000 in October, $956,000 in November, $1,045,000 in December, and $928,000 in January. Rovniak's sales are 20% cash and 80% credit. The company's collection history indicates that credit sales are collected as follows: 25% in the month of the sale 60% in the month after the sale 12% two months after the sale 3% are never collected 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: 25% of current month credit sales 60% of prior month credit sales 12% of credit sales two months ago Total collection of credit sales Total cash collections
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Concept explainers
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.
Question
Rovniak
Reeds, a manufacturer of saxophone, oboe, and clarinet reeds, has projected sales to be $896,000 in October, $956,000 in November, $1,045,000 in December, and $928,000 in January. Rovniak's sales are 20% cash and 80% credit. The company's collection history indicates that credit sales are collected as follows:|
25% in the month of the sale
60% in the month after the sale
12% two months after the sale
3% are never collected
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Requirement 1. Prepare a sales budget for all four months, showing the breakdown between cash and credit sales.
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Rovniak Reeds
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Sales Budget
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For the Four Months Ended January
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October
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November
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December
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January
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Cash sales
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Credit sales
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Total sales
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Requirement 2. Prepare a cash collection budget for December and January. Round all answers up to the nearest dollar.
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Rovniak Reeds
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For the Months of December and January
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December
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January
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Cash sales
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Collection of credit sales:
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25% of current month credit sales
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60% of prior month credit sales
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12% of credit sales two months ago
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Total collection of credit sales
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Total cash collections
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