Reference no: EM132473360

Point 1: Universal Electric Company is a small, rapidly growing wholesaler of consumer electrical products. The firm's main product lines are small kitchen appliances and power tools. Marcia Wilcox, Universal's general manager of marketing, has recently completed a sales forecast. She believes that the company's sales during the first quarter of next year will increase by 10 per cent each month over the previous month's sales. Wilcox then expects sales to remain constant for several months. Universal's projected balance sheet as at 31 December this year is as follows: Cash $ 35 000 Accounts receivable 270 000 Marketable securities 15 000 Inventory 154 000 Buildings and equipment (net of acc. depr.) 626 000 Total assets $1 100 000 Accounts payable $176 400 Long-term loan interest payable 12 500 Property taxes payable 3 600 Long-term loan payable (10% p.a.) 300 000 Share capital 500 000 Retained earnings 107 500 Total liabilities and shareholders' equity $1 100 000 Jack Hanson, the assistant accountant, is now preparing a monthly budget for the first quarter of next year.

In the process, the following information has been accumulated:

• Projected sales for December this year are $400 000. Credit sales typically are 75 per cent of total sales. Universal's credit experience indicates that 10 per cent of the credit sales are collected during the month of sale, and the remainder are collected during the following month.

Question 1: Prepare sales budget and cash receipt budget