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20 April, 21:31

Bright Minds Toy Company prepared the following sales budget for the second quarter. Projected sales for each of the first three months of operations are as follows:

Sales Budget

April May June

Cash Sales 115,000 77,000 140,000

Sales on Account 455,000 500,000 490,000

570,000 577,000 630,000

Bright Minds expects to collect 70% of the sales on account in the month of sale, 20% in the month following the sale, and the remainder in the second month following the sale.

Required:

1. What is the amount of sales revenue that the company will report on the second quarter proforma income statement?

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Answers (1)
  1. 20 April, 21:40
    0
    Total sales is $1,777,000

    Explanation:

    April May June Total

    cash sales $115,000 $77,000 $140,000 $332,000

    sales on account $455,000 $500,000 $490,000 $1,445,000

    Total sales $570,000 $577,000 $630.000 $1,777,000

    Above is the sales analysis for the three months April to June, the total sales in the quarter is $1,777,000 which comprises of both cash sales and credit sales in all of the three months.

    Sales does not be cash, as sales is to recognized when the entity making the sale has performed its obligation of delivering the goods to the customers or delivered on an agreed service.
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