Question

The marketing department of Colette Corporation has submitted the following sales forecast for the upcoming fiscal...

The marketing department of Colette Corporation has submitted the following sales forecast for the upcoming fiscal year (all sales are on account, and recorded in Accounts Receivable):

1st quarter 2nd quarter 3rd quarter 4th quarter
Budgeted unit sales 10,000 13,000 12,000 15,000

The selling price of the company's product is $15 per unit. Management expects to collect 60% of sales in the quarter in which the sales are made, 35% in the following quarter, and 5% of sales are expected to be uncollectible (i.e., will not be collected at all). The beginning balance of Accounts Receivable, all of which is expected to be collected in the first quarter, is $68,500.

The company expects to start the first quarter with 1,550 units in finished goods inventory. Management desires an ending finished goods inventory in each quarter equal to 15% of the next quarter's budgeted sales. The desired ending finished goods inventory for the fourth quarter is 1,750 units.

REQUIRED: Using the following schedule of expected cash collections as a guide, calculate the Total cash collections for each quarter of the year and include your answer in this format in the box below (substituting numbers where the underlines are):

1Q: $______ 2Q: $_______ 3Q: $________ 4Q: $_______ Total Year: $_________

Schedule of Expected Cash Collections
1st quarter 2nd quarter 3rd quarter 4th quarter Total Year
Beginning Accounts Receivable
1st quarter sales
2nd quarter sales
3rd quarter sales
4th quarter sales
Total Cash Collections

Homework Answers

Answer #1

Answer-

COLETTE CORPORATION
Schedule of Expected Cash Collectios
Particulars 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter Total-Year
Budgeted unit sales (a) 10000 13000 12000 15000 50000
Selling price per unit (b) $15 $15 $15 $15 $15
Budgeted sales (c=a*b) $ 150000 195000 180000 225000 750000
Cash collections
Beginning Accounts receivable $68500 68500
1st Quarter sales $150000*60%= $90000 $150000*35%= $52500 142500
2nd Quarter sales $195000*60%= $117700 $195000*35%= $68250 185950
3rd Quarter sales $180000*60%= $108000 $180000*35%= $63000 171000
4th Quarter sales $225000*60%= $135000 135000
Total cash collections $ 158500 170200 176250 198000 702950
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