Question

Exercise 14-2 Preparing a sales budget LO 14-2 Fanning Company, which expects to start operations on January 1, 2018, will sell digital cameras in shopping malls. Fanning has budgeted sales as indicated in the following table. The company expects a 13 percent increase in sales per month for February and March. The ratio of cash sales to sales on account will remain stable from January through March. Required a. Complete the sales budget by filling in the missing amounts b. Determine the amount of sales revenue Fanning will report on its first quarter pro forma income statement. Complete this question by entering your answers in the tabs below. Required A Required B Complete the sales budget by filling in the missing amounts. (Round intermediate calculations and final answers to 2 decimal places.) Sales January February March Cash sales S 39,000 Sales on account 104,000 Total budgeted sales S 143,000 Poguicnd n Prey 1 of 4 Next>

Answer 1

a.	Sales	January	February	March
	Cash Sales	$39,000	$44,070	$49,799
	Sales on Account	$104,000	$117,520	$132,798
	Total Budgeted Sales	$143,000	$161,590	$182,597
	January Total Sales	$143,000
	February Total Sales	$161,590	( $143000*113%)
	March Total Sales	$182,597	($161590*113%)
	Cash Sales/ Sales on Account	39000/104000
		0.375
	February
	Cash Sales =	.375* Sales on Account
	Total Sales =	Cash Sale+ Sales on Account
	Total Sales =	.375 Sales on Account+ Sales on account
	Total Sales =	1.375 Sales on Account
	161590=	1.375 Sales on Account
	Sales on Account	161590/1.375
	Sales on Account	$117,520
	Cash Sales	$161590-$117520
		44070
	March
	161590=	1.375 Sales on Account
	Sales on Account	182597/1.375
	Sales on Account	$132,798
	Cash Sales	182597-132798
		49799
b.	Sales	January	February	March	Total
	Cash Sales	$39,000	$44,070	$49,799	$132,869	(39000+44070+49799)
	Sales on Account	$104,000	$117,520	$132,798	$354,318	(104000+117520+132798)
	Total Budgeted Sales	$143,000	$161,590	$182,597	$487,187	(132869+354318)
	The sales revenue that will be reported on its first quarter pro forma income statement is $ 487187