Question

Flopstop Company expects unit sales to be 2,000 and 3,000 for the first two quarters of 20xx. The selling price is expected to be $100 in Q1 and then increase to $115 for Q2. Twenty percent of the total sales are cash sales. The remaining eighty percent of total sales are credit sales. Credit sales are collected 40% in the quarter following the sale, 40% in the second quarter following the sale and a final 15% percent in the third quarter following the sale. Sales for the previous year were $250,000; $280,000; $310,000 and $360,000 for Q1 through Q4, respectively.

32. Total budgeted revenues for the first two quarters of 20xx is:

   a. $525,000

   b. $530,000

   c. $545,000

   d. None of the above

33. Total cash collections for Q1 and Q2 of 20xx is:

   a. $389,400

   b. $573,400

   c. $423,600

   d. None of the above

Answer 1

Solution 32:

Budgeted revenues for the first two-quarters of 20xx is c. 545,000

	Q1	Q2	Total
Unit Sales	2,000	3,000
Selling Price	100	115
	2,00,000	3,45,000	5,45,000

Solution 33:

Total cash collections for Q1 and Q2 of 20xx is b. 573,400

	Q1	Q2	Total
Unit Sales	2,000	3,000
Selling Price	100	115
Total Budgeted sales	2,00,000	3,45,000	5,45,000
Cash Sales	40,000	69,000	1,09,000
Credit sales	1,60,000	2,76,000
Collected in same quarter			0
Collected in next quarter		64,000	64,000
Collected in third quarter			0
Previous year sales
Q2 Sales (280,000*.8*.15)	33600		33600
Q3 sales (310,000*.8*.40) (310,000*.8*.15)	99,200	37,200	1,36,400
Q4 Sales (360,000*.8*.4) (360,000*.8*.4)	1,15,200	1,15,200	2,30,400
Total cash collection			5,73,400