Question
Promotion Sports Inc. is a retailer of clothing and sports equipment. The following is Promotion Sports' sales forecast by quarter for the upcoming year. Promotion
Promotion Sports Inc. is a retailer of clothing and sports equipment. The following is Promotion Sports' sales forecast by quarter for the upcoming year.
| Promotion Sports Inc. Forecasted Sales For the Year Ended December 31, 2022 | |||||
| Q1 | Q2 | Q3 | Q4 | Total | |
| Sales | $109,000 | $306,000 | $349,000 | $248,000 | $1,012,000 |
In addition, sales in Q3 and Q4 of 2021 totaled $139,000 and $193,000 respectively. According to the company's sales records, 58% of sales are made in cash and the remaining 42% are made on account (i.e. credit sales). Assume the following historical trends were noted by management regarding credit sales:
- 50% of credit customers pay during the quarter in which the sale took place
- 32% of credit customers pay in the quarter immediately following the quarter of sale
- 13% of credit customers pay in the second quarter following the quarter of sale
- The remaining 5% of credit sales are uncollectible
Do not enter dollar signs or commas in the input boxes. Round your answers to the nearest whole number. a) Calculate the forecasted sales for each quarter (separate revenue into cash and credit sales).
| Promotion Sports Inc. Forecasted Sales For the Year Ended December 31, 2022 | |||||
| Q1 | Q2 | Q3 | Q4 | Total | |
| Sales | $Answer | $Answer | $Answer | $Answer | $Answer |
| Cash Sales (@58% of quarter's sales) | $Answer | $Answer | $Answer | $Answer | $Answer |
| Credit Sales (@42% of quarter's sales) | $Answer | $Answer | $Answer | $Answer | $Answer |
b) Prepare the cash receipts section of the 2022 cash budget (on a quarterly basis)
| Promotion Sports Inc. Cash Receipts For the Year Ended December 31, 2022 | |||||
| Q1 | Q2 | Q3 | Q4 | Total | |
| Cash Sales | $Answer | $Answer | $Answer | $Answer | $Answer |
| Current Collections (50%) | $Answer | $Answer | $Answer | $Answer | $Answer |
| Previous Quarter Collection (32%) | $Answer | $Answer | $Answer | $Answer | $Answer |
| Two Previous Quarter Collection (13%) | $Answer | $Answer | $Answer | $Answer | $Answer |
| Total Cash Receipts | $Answer | $Answer | $Answer | $Answer | $Answer |
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Core Concepts Of Accounting Information Systems
Authors: Nancy A. Bagranoff, Mark G. Simkin, Carolyn Strand Norman
11th Edition
9780470507025, 0470507020
