Question

The marketing department of Jessi Corporation has submitted the following sales forecast for the upcoming fiscal year (all sales are on account): Budgeted unit sales 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter 12,300 13,300 1 5,300 14,300 The selling price of the company's product is $22 per unit. Management expects to collect 75% of sales in the quarter in which the sales are made, 20% in the following quarter, and 5% of sales are expected to be uncollectible. The beginning balance of accounts receivable, all of which is expected to be collected in the first quarter, is $72,800. The company expects to start the first quarter with 2,460 units in finished goods inventory. Management desires an ending finished goods inventory in each quarter equal to 20% of the next quarter's budgeted sales. The desired ending finished goods inventory for the fourth quarter is 2,660 units. Required: 1. Calculate the estimated sales for each quarter of the fiscal year and for the year as a whole. 2. Calculate the expected cash collections for each quarter of the fiscal year and for the year as a whole. 3. Calculate the required production in units of finished goods for each quarter of the fiscal year and for the year as a whole. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Calculate the estimated sales for each quarter of the fiscal year and for the year as a whole. 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter Year ! Total sales

Answer 1

Ans. 1	JESSI CORPORATION
	Sales Budget
	Particulars	1st quarter	2nd quarter	3rd quarter	4th quarter
	Budgeted unit sales	12300	13300	15300	14300
	(*) Selling price per unit	$22	$22	$22	$22
	Total sales	$270,600	$292,600	$336,600	$314,600
Ans. 2	Shedule of Expected Cash Collections
	Particulars	1st quarter	2nd quarter	3rd quarter	4th quarter
	Accounts receivable balance	$72,800
	1st quarter	$202,950	$54,120
	2nd quarter		$219,450	$58,520
	3rd quarter			$252,450	$67,320
	4th quarter				$235,950
	Total cash collections	$275,750	$273,570	$310,970	$303,270
	*Calculations:
	Particulars	1st quarter	2nd quarter	3rd quarter	4th quarter
	Accounts receivable balance	given
	1st quarter	$270,600*75%	$270,600*20%
	2nd quarter		$292,600*75%	$292,600*20%
	3rd quarter			$336,600*75%	$336,600*20%
	4th quarter				$314,600*75%
	*20% of fourth quarter's sales would be collected in the first quarter of next year.
Ans. 3	JESSI CORPORATION
	Production Budget
	For the Year Ended December 31
		First quarter	Second quarter	Third quarter	Fourth quarter	Total
	Sales	12300	13300	15300	14300
	Add: Desired Ending inventory	2660	3060	2860	2660
	Total needs	14,960	16,360	18,160	16,960
	Less: Beginning inventory	-2460	-2660	-3060	-2860
	Units to be produced	12,500	13,700	15,100	14,100	55,400
*Calculations for Ending inventory:					*Calculations for Beginning inventory:
Quarter				Quarter
1	13,300 * 20%	2660		1	(given)	2460
2	15,300 * 20%	3060		2	Ending inventory of Q1	2660
3	14,300 * 20%	2860		3	Ending inventory of Q2	3060
4	(given)	2660		4	Ending inventory of Q3	2860