Question
A company is formulating its plans for the coming year, including the preparation of its cash budget. Historically, the company's sales are 30% cash. The
A company is formulating its plans for the coming year, including the preparation of its cash budget. Historically, the company's sales are 30% cash. The remaining sales are on credit with the following collection pattern:
Collections on Account | Percentage | |
| In the month of sale | 40% |
| In the month following the sale | 58% |
| Uncollectible | 2% |
Sales for the first 5 months of the coming year are forecast as follows:
January | $3,500,000 |
February | 3,800,000 |
March | 3,600,000 |
April | 4,000,000 |
May | 4,200,000 |
For the month of April, the total cash receipts from sales and collections on account would be
$3,729,968
$3,781,600
$4,025,200
$4,408,000
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