Answer:
a) The Sales Budget for the 2019 first quarter will be:
January - $340,000
February - $391,000 (340,000 x 1.15)
March - $449,650 (391,000 x 1.15)
b) The amount of sales revenue to be reported for the first 2019 quarter is $1,180,650, i.e. the total of sales from January to March. This equals $1,180,650 (340,000 + 391,000 + 449,650).
c) The cash receipts schedule for the first quarter of 2019 will look like this:
January - 66% of $340,000 = $224,400.
February - 66% of $391,000 + 22% of $340,000 = $332,860.
March - 66% of $449,650 + 22% of $391,000 + 12% of $340,000 = $373,589.
Total cash receipts for the first quarter is $930,849 (224,400 + 332,860 + 373,589)
d) The amount of accounts receivable as of March 31, 2019 is $249,801 (the difference between total quarter sales of $1,180,650 and total quarter cash receipts of $930,849)
Explanation:
A Sales Budget is prepared to determine the sales outlook given certain units of sales at given price units based on prevailing business environment. It is an educated guess, like all estimates, to value the outcome of a company's sales efforts in the future.
The sales budget determines the revenue to be anticipated and reported. It is also the basis for cash receipts and the balance of the accounts receivable.
