Question

In the coming year, Sunland, Inc. will be introducing its first product, a wrist brace that protects serious video gamers from repetitive-motion injuries. The brace will be sold for $19 to retailers throughout the country. All sales will be made on account. An expected 65% of sales will be collected within the quarter of the sale, and another 30 % in the quarter following the sale. The remaining 5% of credit sales are expected to be uncollectible. The sales budget for the coming year is as follows:

			1st Quarter		2nd Quarter		3rd Quarter		4th Quarter
	Budgeted sales units		30,000		43,100		52,900		81,300

Prepare Sunland, Inc.'s, cash receipts budget for the coming year. (Enter answers in necessary fields only. Leave other fields blank. Do not enter 0.)

	Sales Budget
			1st Quarter	2nd Quarter	3rd Quarter	4th Quarter	Annual
	Budgeted units sold
	Budgeted sales price		$	$	$	$	$
	Budgeted sales revenue		$	$	$	$	$

	Cash Receipts Budget
			1st Quarter	2nd Quarter	3rd Quarter	4th Quarter	Bad Debts
	1st quarter sales		$	$	$	$	$
	2nd quarter sales
	3rd quarter sales
	4th quarter sales
	Totals		$	$	$	$	$

Determine the Net Accounts Receivable at the end of the year. Assume that no accounts have been written off during the year.

Net Accounts Receivable

$

Answer 1

	Sales Budget
			1st Quarter	2nd Quarter	3rd Quarter	4th Quarter	Annual
	Budgeted units sold		30,000	43,100	52,900	81,300	207,300
	Budgeted sales price		$19	$19	$19	$19	$19
	Budgeted sales revenue		$570,000	$818,900	$1,005,100	$1,544,700	$3,938,700

	Cash Receipts Budget
			1st Quarter	2nd Quarter	3rd Quarter	4th Quarter	Bad Debts
	1st quarter sales		570,000 x 65% =370,500	570,000 x 30% = 171,000			570,000 x 5% = 28,500
	2nd quarter sales			818,900 x 65% = 532,285	818,900 x 30% = 245,670		818,900 x 5% = 40,945
	3rd quarter sales				1,005,100 x 65% = 653,315	1,005,100 x 30% = 301,530	1,005,100 x 5% = 50,255
	4th quarter sales					1,544,700 x 65% = 1,004,055	1,544,700 x 5% = 77,235
	Totals		$370,500	$703,285	$898,985	$1,305,585	$196,935

Net Accounts Receivable = 30% of 4th quarter sales

= 1,544,700 x 30%

= $463,410

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