Freeway Furniture Company produces office furniture with actual sales of office chairs for March 2023 of 9,000 units. The company is planning its operations for April to June 2023 and estimates sales for April to June 2023 to increase by 5% monthly in April and May 2023, and 10% in June 2023.

The unit sales price is estimated at $30, with 25% being cash sales, the balance being credit sales. 30% of the credit sale is collected on the last week of the month of sale and 65% of the credit sale paid the following month. The balance of monthly credit sale is written-off as bad debt at point of sale.

The accounts receivable balance on March 31, 2023 was $65,000.

The company planned a monthly inventory level of 10% of the following month's budgeted sales units.

On March 31, 2023 the inventory on hand was 923 units.

Required

a. Using the above information, you are required to prepare the sales budget and the cash collection schedule for the period April to June 2023.

b. Suppose the company wants to reduce its bad debt from 5% of credit sales to 2%, briefly suggest what it could do, going forward.

Answer rating: 100% (QA)

a Sales Budget and Cash Collection Schedule for April to June 2023 Sales Budget April 2023 Estimated Sales 9000 units 105 9450 units Cash Sales 9450 u... View the full answer