Rundle Company, which expects to start operations on January 1, 2018, will sell digital cameras in shopping malls. Rundle 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 Complete the sales budget by filling in the missing amounts.
Determine the amount of sales revenue Rundle will report on its first quarter pro forma income statement.

We have the budgeted figures for January. While the ratio of Cash Sales to Sales on Account is 30 to 70 respectively. From the question, we have been advised to maintain this ratio.

Therefore to calculate the Sales figure for the following months: February & March. The total budgeted Sales for January will be increased by 11%.

Solving for February Figures

11% of $170,000 will give us a total Sales figure of $188,700. This figure is further split between Cash Sales(30%) = $56,610 and Sales on Account(70%) = $132,090 respectively.

Solving for March Figures

11% of $188,700 will give us a total Sales figure of $209,457. This figure is further split between Cash Sales(30%) = $62,837.10 and Sales on Account(70%) = $146,619.90 respectively.

The total Sales Revenue is the addition of $170,000+ $188,700+$209,457 = $568,157

anthougo anthougo · Answer 2 · 2022-04-07T13:37:08+02:00

1. The completion of the sales budget based on an expected January sales revenue of $170,000 and an expected 11% increase in sales per month with a stable ratio of cash sales to sales on account for Rundle Company is as follows:

Rundle Company

Sales Budget

For the first quarter of the year, 2018

January February March Total

Sales:

Cash Sales: $50,000 $55,500 $61,605 $167,105

Sales on Account: $120,000 $133,200 $147,852 $401,052

Total Budgeted Sales $170,000 $188,700 $209,457 $568,157

2. The amount of the sales revenue that Rundle Company will report on its first-quarter pro forma income statement is $568,157.

What is a sales budget?

A sales budget is an estimate of the total revenue in a specific period.

The sales budget is a function of the sales units and the price per unit.

The preparation of the sales budget helps management to plan for the maximum utilization of resources and to forecast production or purchasing activities.

Data and Calculations:

Table for January Figures:

Cash Sales: $50,000

Sales on Account: $120,000

Total Budgeted Sales(January): $170,000

Increase in sales per month = 11%

The ratio of cash sales to sales on account = 29.4:70.6

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