Rosewood Guitar, Inc. is preparing it cash receipts schedule forthe 1stquarter ending 20x1. In doing so, itsbudget director prepared the following budgeted sales schedule:
| Rosewood Guitar Company |
| Sales Budget |
| For the Quarter Ending March 31, 20x1 |
| January | February | March |
Budgeted sales | $185,000 | $195,000 | $225,000 |
Addition Information:
- Sales for the prior November and December 200x0 were $150,000and $165,000, respectively.
- 55% of sales are for cash, the remaining 45% are credit sales.
- Credit sales are collected as follows:
- 15% in the month of sale
- 65% in the month following the sale, and the remaining
- 15% in the second month following the sale.
- The company estimates that the remainder of credit sales willbe uncollectible.
Required
- Prepare a cash receipts schedule for the first quarter of 20x1.(Please show your detailed schedule)
- What is the total amount of uncollected accounts receivable forthe 3-month period, January, February and March?
- Briefly, provide the definition for the term “budgetaryslack.” Why does, budgetary slack occur?
- What is the primary indication that “budgetary slack” isoccurring?
