Question
Ed Sheeran Enterprises sells autographed guitar picks. All sales are made on account. Sales for the fourth quarter of Year 1 totaled $600,000. Sales are
Ed Sheeran Enterprises sells autographed guitar picks. All sales are made on account. Sales for the fourth quarter of Year 1 totaled $600,000. Sales are expected to grow at a rate of 20% per quarter. Ed Sheeran Enterprises' collection experience is that 70% of accounts receivable will be collected in the quarter of sale, 25% in the next quarter, and 5% of receivables are expected to be uncollectible and are written off during the quarter following the quarter of sale. The balance in accounts receivable at the end of December Year 1 was
$150,000.
Show all calculations for credit.
- Prepare the sales budget for Ed Sheeran Enterprises for all four quarters of Year 2.
- Prepare a cash receipts schedule for ONLY the 3rd and 4th quarters of Year 2.
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