Jon Snow distributes men’s watches in the Midwest. The following information was gathered to prepare the budget for the...
Jon Snow distributes men’s watches in the Midwest. The following information was gathered to prepare the budget for the second quarter (April 1st – June 30th)
- Budgeted Selling Price
- The sales budget is given below:
|
April |
May |
June |
quarter |
|
|
Sales in units |
4,500 |
5,500 |
4,000 |
14,000 |
|
Price per unit |
$ 250 |
$ 250 |
$ 250 |
$ 250 |
|
Total Sales |
$ 1,125,000 |
$ 1,375,000 |
$ 1,000,000 |
$ 3,500,000 |
|
March May 4,000 4,500 $ 250 $ 250 $ 1,000,000 $ 1,125,000 |
- Sales are made for cash and on credit. The following collection pattern is used to estimate monthly cash collections:
|
Cash sales |
45% |
|
Credit sales – in the month of sale |
30% |
|
Credit sales - in the month after sale |
20% |
|
Uncollectible |
5% |
|
Total |
100% |
Desired ending inventory is 25% following month’s sales.
Watches on hand March 31st: 1,125
Average cost per watch: $175
Prepare a schedule of cash collections for the second quarter. Please include all three months and the quarter total.
Prepare a purchases budget for the second quarter. Please include all three months and the Quarter total
Homework Answers
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| April | May | June | Quarter | |||
| Total Sale | $ 1,125,000 | $ 1,375,000 | $ 1,000,000 | $ 3,500,000 | ||
| Cash Sale | 45% | $ 506,250 | $ 618,750 | $ 450,000 | $ 1,575,000 | |
| Credit Sale-Same Month | 30% | $ 337,500 | $ 412,500 | $ 300,000 | $ 1,050,000 | |
| Credit Sale-next month | 20% | $ 225,000 | $ 225,000 | $ 275,000 | $ 725,000 | |
| Total Cash Collection | $ 1,068,750 | $ 1,256,250 | $ 1,025,000 | $ 3,350,000 | ||
| Purchase Budget: | ||||||
| April | May | June | Quarter | July | ||
| Budgeted Sale | 4,500 | 5,500 | 4,000 | 14,000 | 4,500 | |
| Add: Desired Ending Inventory | 25% | 1,375 | 1,000 | 1,125 | 1,125 | |
| Total Need | 5,875 | 6,500 | 5,125 | 15,125 | ||
| Less: Beginning inventory | (1,125) | (1,375) | (1,000) | (1,125) | ||
| Budgeted Purchase in units | 4,750 | 5,125 | 4,125 | 14,000 | ||
| Cost per unit | $ 175 | $ 175 | $ 175 | $ 175 | ||
| Budgeted Purchase $ | $ 831,250 | $ 896,875 | $ 721,875 | $ 2,450,000 | ||
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