Question

Jackon, Inc. has the following sales budget for next year. Jackson has a gross margin %...

Jackon, Inc. has the following sales budget for next year. Jackson has a gross margin % of 18% and sells everything on credit. Accounts are expected to be collected as follows: 55% in the quarter of the sales; 25% in the quarter following the sale; 20% in the second quarter following the sale.

Quarter 1 Quarter 2 Quarter 3 Quarter 4
Sales Revenue $130,000 $85,000 $105,000 $120,000

A. What is budgeted cost of goods sold for Quarter 2?

B. What is accounts receivable on the balance sheet at the end of Quarter 4?

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Answer #1

a). Jaksong Inc. has gross margin of 18%.
Sales for Quarter 2 = $85000
Budgeted cost of goods sold = Sales - Gross margin = 100% - 18% = 82%
= $85000 *82% = $69,700

b). Calculation of account receivable at the end of Quarter 4:
Payments of Quarter 1 and 2 are going to fully received till Quarter 4, hence Payments are pending only for Quarter 3 and 4.
Payment pending of Quarter 3 = $105000 * 20% = $21000
Payment pending of Quarter 4 = $120000 * 45% (25%+20%) = $54000
Total account receivable at the end of Quarter 4 = 21000+54000 = $75000

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