Najimi Enterprises Recently Began Selling on Internet

question 128

Essay

Najimi Enterprises recently began selling on internet. Internet sales for the fourth quarter of 2014 totaled $600,000. The company's internet sales are expected to grow at a rate of 20% per quarter. All sales are made on account. The company's collection experience is that 70% of accounts receivable will be collected in the quarter of sale and 25% in the next quarter. Five percent of receivables will prove uncollectible and are written off during the quarter following the quarter of sale. The balance in accounts receivable at the end of December 2013 was $180,000.
Required:
a) Prepare a sales budget for internet sales for the four quarters of 2014; include a total column that shows total budgeted internet sales for the year.
b) Compute the accounts receivable balance as of the end of 2014.
c) Prepare a cash receipts schedule for all four quarters of 2014 and the year as a whole.

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