Pithead Products Ltd plans to sell its single product for 35 a unit. Credit plans for the
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Pithead Products Ltd plans to sell its single product for £35 a unit.
Credit plans for the next six months are as follows:
● 70 per cent of sales are made on credit and 30 per cent for cash.
Of the credit sales revenue:
● 40 per cent will be paid during the month of sale (with the customers claiming a cash
discount of 2 per cent of the amount owed);
● 40 per cent will be paid during the month following the month of sale;
● 18 per cent will be paid during the second month after the sale; and
● the remaining 2 per cent will prove to be bad debts and are expected never to be paid.
Sales volumes for the next few months are budgeted as follows:
How much cash will be budgeted to be received from sales during October?
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