Band Instruments Company has the following sales budget for the first three months of the current year:

Month	Sales Revenue
January	$600,000
February	150,000
March	440,000

Historically, the following trend has been established regarding cash collection of sales:

65 percent in month of sale

25 percent in month following sale

8 percent in second month following sale

2 percent uncollectible

November and December sales were $100,000 and $200,000, respectively.

Required: Prepare a schedule of budgeted cash collections from sales for January, February, and March.

I NEED ENTIRE EXPLANATION ABOUT THIS PROBLEM AND HOW TO SOLVE IT. I NEED TO EXPLANATION FOR THIS ANSWER GIVEN.

Answer:

January collections:
From November sales	8% of $100,000	$ 8,000
From December sales	25% of $200,000	50,000
From January sales	65% of $600,000 x 0.98	382,200
Total January collections		$440,200

February collections:
From December sales	8% of $200,000	$ 16,000
From January sales	25% of $600,000	150,000
From February sales	65% of $150,000 x 0.98	95,550
Total February collections		$261,550

March collections:
From January sales	8% of $600,000	$ 48,000
From February sales	25% of $150,000	37,500
From March sales	65% of $440,000 x 0.98	280,280
Total March collections		$365,780