Question

Sycamore Company, which expects to start operations on January 1, 2014, will sell digital cameras in shopping malls. Sycamore has budgeted sales as indicated in the following table. The company expects a 11 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:
a. Complete the sales budget by filling in the missing amounts.
Sales January February March
Cash sales $47,000
Sales on account 103,000
Total budgeted sale $150,000
b. Determine the amount of sales revenue Sycamore will report on its first quarter pro forma income statement.

Answer 1

a. Sales January February March

Cash sales $47,000 $52,170 $57,908.7

Sales on account $103,000 $114,330 $126,906.3

Total budgeted sales $150,000 $166,500 $184,815

Workings

February Cash sales: 47,000*11% = $47,000 + $5170 = $52,170

February Sales on account: $103,000*11% = $103,000 + $11,330 = $114,330

March Cash sales: $52,170 * 11% = $52,170 + $5738.70 = $57,908.7

March Sales on account: $114,330 * 11% = $114,330 + $12,576.3 = $126,906.3

b. Sales revenue in first quarter = $150,000 + $166,500 + $184,815

Sales revenue in first quarter = $501,315