The management team of Gibson Modems, Incorporated (GMI) wants to investigate the effect of several different growth, rates on sales and cash receipts. Cash sales for the month of January are expected to be $90,000. Credit sales for January are expected to be $450,000. GMI collects 100 percent of credit sales in the month following the month of sale. Assume a beginning balance in accounts receivable of $432,000.
Required
Calculate the amount of sales and cash receipts for the months of February and March assuming a growth, rate of 2 percent and 4 percent. The results at a growth, rate of 1 percent are shown as an example.
Sales Budget
January February March
Cash sales $ 90,000 $ 90,900 $ 91,809
Sales on account 450,000 454,500 459,450
Total budgeted sales $540,000 $ 545,400 $ 550,854
Schedule of Cash Receipts
January February March
Current cash sales $ 90,000 $ 90,900 $ 91,809
Plus collections from accounts receivable 432,000 454,500 459,450
Total budgeted collections $ 522,000 $ 545,400 $ 551,259
Use the following forms, assuming a growth, rate of 2 percent and 4 percent:
Complete this question by entering your answers in the tabs below.
2 percent
Sales Budget
January February March
Cash sales $ 90,000 $ 91,800 $ 93,636
Sales on account 450,000 459,000 468,180
Total budgeted sales $540,000 $ 550,800 $ 561,816
Schedule of Cash Receipts
January February March
Current cash sales $ 90,000 $ 91,800 $ 93,636
Plus collections from accounts receivable 432,000 459,000 468,180
Total budgeted collections $ 522,000 $ 550,800 $ 561,816
4 percent
Sales Budget
January February March
Cash sales $ 90,000 $ 93,600 $ 97,344
Sales on account 450,000 468,000 486,720
Total budgeted sales $540,000 $ 561,600 $ 584,064
Schedule of Cash Receipts
January February March
Current cash sales $ 90,000 $ 93,600 $ 97,344
Plus collections from accounts receivable 432,000 468,000 486,720
Total budgeted collections $ 522,000 $ 561,600 $ 584,064
