The management team of Franklin Modems, Inc. (FMI) wants to investigate the effect of several different growth rates on sales and cash receipts. Cash sales for the month of January are expected to be $80,000. Credit sales for January are expected to be $400,000. FMI collects 100 percent of credit sales in the month following the month of sale. Assume a beginning balance in accounts receivable of $384,000.

Required

Calculate the amount of sales and cash receipts for the months of February and March assuming a growth rate of 2 percent and 4 percent. The results at a growth rate of 1 percent are shown as an example.

Use the following forms, assuming a growth rate of 2 percent and 4 percent:

Sales Budget Mar $ 81,608 408,040 $489,648 Jan Cash sales Sales on account $80,000 400,000 $ 80,800 404,000 $484,800 Total budgeted sales $480,0060 Schedule of Cash Receipts $80,800e 400,000 $ 81,608 Current cash sales Plus collections from accts. rec. Total budgeted collections $80,000e 384 ,000 404,000 $464,000 $480,800 $485,608