Question

Bright Minds Toy Company prepared the following sales budget for the second quarter. Projected sales for each of the first three months of operations are as follows:
Sales Budget
April May June
Cash Sales 115,000 77,000 140,000
Sales on Account 455,000 500,000 490,000
570,000 577,000 630,000
Bright Minds expects to collect 70% of the sales on account in the month of sale, 20% in the month following the sale, and the remainder in the second month following the sale.
Required:
1. What is the amount of sales revenue that the company will report on the second quarter proforma income statement?

Answer 1

Answer:

Total sales is $1,777,000

Explanation:

                                  April            May              June                       Total

cash sales                $115,000   $77,000         $140,000             $332,000  

sales on account     $455,000  $500,000      $490,000        $1,445,000

Total sales                 $570,000 $577,000      $630.000        $1,777 ,000

Above is the sales analysis for the three months April to June,the total sales in the quarter is $1,777,000 which comprises of both cash sales and credit sales in all of the three months.

Sales does not be cash,as sales is to recognized when the entity making the sale has performed its obligation of delivering the goods to the customers or delivered on  an agreed service.