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9-32
Splendid Stereo, Inc. is a large retailer of stereo equipment. The controller is about to prepare the budget for the first quarter of 20×5. Past experience has indicated that 75 percent of the store’s sales are cash sales. The collection experience for the sales on account is as follows:
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80% during month of sale
15% during month following sale
5% uncollectible
The total sales for December 20×4 are expected to be $380,000. The controller feels that sales in January 20×5 could range from $200,000 to $320,000.
- Demonstrate how financial planning can be used to project cash receipts in January of 20×5 for three different levels of January sales. Use the following columnar format.
Total Sales in January, 20×5
$200,000 $260,000 $320,000
Cash receipts in January 20×5:
From December sales on account
$______ $______ $______
From January cash sales
$______ $______ $______
From January sales on account
$______ $______ $______
Total cash receipts
$______ $______ $______
- How could the controller of Splendid Stereo, Inc. use this financial planning approach to help in planning operations for January?
© BrainMass Inc. brainmass.com March 21, 2019, 1:12 pm ad1c9bdddf
https://brainmass.com/business/business-management/cash-receipt-schedule-profit-planning-90667
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9-32
Splendid Stereo, Inc. is a large retailer of stereo equipment. The controller is about to prepare the budget for the first quarter of 20×5. Past experience has indicated that 75 percent of the store’s sales are cash sales. The collection experience for the sales on account is as follows:
80% during month of sale
15% during month following sale
5% uncollectible
The total sales for December 20×4 are expected to be $380,000. The …
