Detmer Enterprises has budgeted sales for the next four months as follows: Budge

Question

 Detmer Enterprises has budgeted sales for the next four months as follows: 

                   Budgeted Sales in Units January                7,400 units                               February               5,300 units March                  3,900 units April                  ????? units 

 Detmer's product sells for $20 each.  Experience has shown that 10% of the company's sales are cash sales and 90% of the company's sales are made on account. The sales on account are collected in the pattern 30% in the month of sale, 45% in the month following sale, and 25% is collected in the second month following sale.  Detmer's pro forma balance sheet at April 30 reported a budgeted accounts receivable balance of $104,490. 

 Calculate the number of units budgeted to be sold in April. Do not use decimals or the $ in your answer. Additionally, do not type the word units after your answer. 

Explanation / Answer

Let the Sales units of April be X. So, Credit Sales of April = 18X

The credit Sales made in January will be collected in January, February and March.

The credit Sales made in February will be collected in February, March and April.

(30 + 45)% of credit sales of march will be collected by April and 25% will be remaining as receivables in April.

So,receivables of march pending in april closing balance = March Credit Sales x 25% = $70,200 x 25% = $17,550

and

30% of credit sales of april will be collected by April and 70% will be remaining as receivables in April.

So,receivables of april pending in april closing balance = April Credit Sales x 70% = 18 X x 70% = 12.60 X.

So, March + April remaining balance = $104,490

So, $17,550 + 12.60 X = $104,490

So, X = $86,940 / 12.60 = 6,900 units.

So, number of units budgeted to be sold in April = 6,900 units.

January February March April A Sales units 7400 5300 3900 X B Selling perice per unit 20 20 20 20 C = A x B Total Sales 148000 106000 78000 20X D = C x 10% Less: Cash Sales 14800 10600 7800 2X E = C - D Credit Sales 133200 95400 70200 18X January Sales 30% 45% 25% February Sales 30% 45% 25% March Sales 30% 45% April Sales 30%

Related Questions

Navigate

• Browse (All)
• Browse D
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.