Question

Vernon Company, which expects to start operations on January 1, year 2, will sell digital cameras...

Vernon Company, which expects to start operations on January 1, year 2, will sell digital cameras in shopping malls. Vernon has budgeted sales as indicated in the following table. The company expects a 13 percent increase in sales per month for February and March. The ratio of cash sales to sales on account will remain stable from January through March.

Required

  1. Complete the sales budget by filling in the missing amounts.
  2. Determine the amount of sales revenue Vernon will report on its first quarter pro forma income statement.
  • Required A
  • Required B

Complete the sales budget by filling in the missing amounts. (Do not round intermediate calculations. Round final answers to two decimal places.)
Sales January February March
Cash sales $38,000
Sales on account 101,000
Total budgeted sales $139,000

Determine the amount of sales revenue Vernon will report on its first quarter pro forma income statement. (Do not round intermediate calculations. Round final answers to two decimal places.)
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Homework Answers

Answer #1
  • Requirement A

Sales

January

February

March

Cash sales

$38,000

$42,940

$48,522

Sales on account

$101,000

$114,130

$128,967

Total budgeted sales

$139,000

$157,070

$177,489

--Working

Sales

January

February

March

Cash sales

38000

=38000*157070/139000

=38000*177489/139000

Sales on account

101000

=101000*157070/139000

=101000*177489/139000

Total budgeted sales

=38000+101000

=139000+(139000*13%)

=157070+(157070*13%)

  • Requirement B

Sales Revenue to be reported = $ 139000 + 157070 + 177489
= $ 473,559

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