Majestic Corporation has found that 70% of its sales in any given month are credit sales, while the remainder is cash sales. Of the credit sales, the company has experienced the following collection pattern:
25% paid in the month of the sale
50% paid in the month after the sale
16% paid two months after the sale
9% of the sales are never collected
November sales for last year were $80,000, while December sales were $125,000. Projected sales for the next three months are as follows:
January sales ........................................................................................................... $150,000
February sales ......................................................................................................... $130,000
March sales .............................................................................................................. $170,000
Requirement
Prepare a cash collections budget for the first quarter, with a column for each month and for the quarter.