Prepare sales and cash collections budgets (Learning Objectives 2, 3)

Rovniak Reeds, a manufacturer of saxophone, oboe, and clarinet reeds, has pro¬ jected sales to be $890,000 in October, $950,000 in November, $1,025,000 in December, and $920,000 in January. Rovniak’s sales are 25% cash and 75% credit. Rovniak’s collection history indicates that credit sales are collected as follows:

Requirements 1. Prepare a sales budget for all four months, showing the breakdown between cash and credit sales.
2. Prepare a cash collections budget for December and January. Round all answers up to the nearest dollar.

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25% in the month of the sale 65% in the month after the sale 8% two months after the sale 2% are never collected