Week 6, LO 2 Demo

Week 6, LO 2 Demo - Consider the example below: Werther...

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Week 6 Week 6 Skill Building Demonstration Problem 2 Prepare a sales budget, including a schedule of expected cash collections . Learning Objective 2 The Sales Budget and the Schedule of Cash Collections. The sales budget is the starting point in the preparation of the master budget. The sales budget is constructed by multiplying the budgeted unit sales by the unit selling price. A schedule of expected cash collections is prepared after the sales budget completed. This schedule is used to prepare the cash budget. Definitions
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Unformatted text preview: Consider the example below: Werther Inc. produces and sells butterscotch candy. The company is in its first year of operations. The company plans to sell 1000 bags of candy during the next year. At Werther Inc, all sales are on account (credit). Experience has shown that 60% of sales are collected in the quarter the sale is made and the remaining 40% are collected in the following quarter. The sales budget and schedule of expected cash collections are computed as follows: Example...
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This note was uploaded on 04/21/2011 for the course ACTG 211 taught by Professor Staff during the Spring '08 term at Ill. Chicago.

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