1. Demonstrate how financial planning can be used to project cash receipts in January of 20x2 for three different levels of January sales. Use the following columnar format. Total Sales in January 20x2 $100,000 $130,000 $160,000 Cash receipts in January 20x2: From December sales on account $ $ 2$ From January cash sales . From January sales on account Total cash receipts $ $ 2$

Managerial Accounting
15th Edition
ISBN:9781337912020
Author:Carl Warren, Ph.d. Cma William B. Tayler
Publisher:Carl Warren, Ph.d. Cma William B. Tayler
Chapter8: Budgeting
Section: Chapter Questions
Problem 17E
icon
Related questions
icon
Concept explainers
Question

Sound Investments, Inc. is a large retailer of stereo equipment. The controller is about to prepare the budget for the first quarter of 20x2. Past experience has indicated that 75 percent of the store’s sales are cash sales. The collection experience for the sales on account is as follows:

80 percent during month of sale
15 percent during month following sale
5 percent uncollectible

The total sales for December 20x1 are expected to be $190,000. The controller feels that sales in January 20x2 could range from $100,000 to $160,000.
Required:

1. As attached

2. How could the controller of Sound Investments, Inc. use this financial planning approach to help in planning operations for January?

1. Demonstrate how financial planning can be used to project cash receipts in January of 20x2 for
three different levels of January sales. Use the following columnar format.
Total Sales in January 20x2
$100,000 $130,000 $160,000
Cash receipts in January 20x2:
From December sales on account
$
$
2$
From January cash sales .
From January sales on account
Total cash receipts
$
$
2$
Transcribed Image Text:1. Demonstrate how financial planning can be used to project cash receipts in January of 20x2 for three different levels of January sales. Use the following columnar format. Total Sales in January 20x2 $100,000 $130,000 $160,000 Cash receipts in January 20x2: From December sales on account $ $ 2$ From January cash sales . From January sales on account Total cash receipts $ $ 2$
Expert Solution
trending now

Trending now

This is a popular solution!

steps

Step by step

Solved in 2 steps with 2 images

Blurred answer
Knowledge Booster
Budgeting
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.
Similar questions
  • SEE MORE QUESTIONS
Recommended textbooks for you
Managerial Accounting
Managerial Accounting
Accounting
ISBN:
9781337912020
Author:
Carl Warren, Ph.d. Cma William B. Tayler
Publisher:
South-Western College Pub