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Rosewood Guitar, Inc. is preparing it cash receipts schedule for the 1stquarter ending 20x1.  In doing so,...

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Accounting

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

  1. Prepare a cash receipts schedule for the first quarter of 20x1.(Please show your detailed schedule)
  2. What is the total amount of uncollected accounts receivable forthe 3-month period, January, February and March?
  3. Briefly, provide the definition for the term “budgetaryslack.”  Why does, budgetary slack occur?
  4. What is the primary indication that “budgetary slack” isoccurring?

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