In the coming year, Game Monster, Inc., will be introducing its first product, a
ID: 2454302 • Letter: I
Question
In the coming year, Game Monster, Inc., will be introducing its first product, a wrist brace that protects serious video gamers from repetitive-motion injuries. The brace will be sold for $19 to retailers throughout the country. All sales will be made on account. An expected 75 percent of sales will be collected within the quarter of the sale, and another 20 percent in the quarter following the sale. The remaining 5 percent of credit sales are expected to be uncollectible. The sales budget for the coming year is as follows: 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter Budgeted sales units 26,500 44,700 54,300 81,800 Prepare Game Monster, Inc.'s, cash receipts budget for the coming year. (Enter answers in necessary fields only. Leave other fields blank. Do not enter 0.) Sales Budget 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter Annual Budgeted units sold Budgeted sales price $ $ $ $ $ Budgeted sales revenue $ $ $ $ $ Cash Receipts Budget 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter Bad Debts 1st quarter sales $ $ $ $ $ 2nd quarter sales 3rd quarter sales 4th quarter sales Totals $ $ $ $ $ Calculate accounts receivable balance at the end of the last quarter. Accounts Receivable balance $
Explanation / Answer
Sales buget
For cash receipt in quarter 1 we will get cash collection of 75% in relation to quarter 1 sales and out of the remaining sales of quarter 1 20% will be collected in quarter 2.
Cash receipts budget
Total cash receipts,
Quarter 1 = $377625
Quarter 2 = $737675
Quarter 3 = $943635
Quarter 4 = $1371990
Bad debts
1st quarter sales = $503500*5% = $25175
2nd quarter sales = $849300*5% = $42465
3rd quarter sales = $1031700*5% = $51585
4th quarter sales = $1554200*5% = $77710
Total bad debts = $196935
5% of last quarter sales will be written off as bad debts and remaining 20% will be accounts receivable balance, Account receivable balance at the end of last quarter = $1554200 * 20% = $310840
PERIOD UNITS PRICE PER BRACE SALES REVENUE Quarter1 26500 19 503500 Quarter2 44700 19 849300 Quarter3 54300 19 1031700 Quarter4 81800 19 1554200 Annual budgeted 207300 19 3938700