Cash Receipts

The sales budget for Perrier Inc. is forecasted as follows:

MonthSales RevenueMay$100,000June170,000July180,000August120,000

To make a cash budget, the company must determine the budgeted cash collections from sales. Historically, the following trend has been established regarding cash collection of sales:

• 60 percent in the month of sale.
• 20 percent in the month following sale.
• 15 percent in the second month following sale.
• 5 percent uncollectible.

The company gives a 1 percent cash discount for payments made by customers during the month of sale. The accounts receivable balance on April 30 is $27,000, of which $6,000 represents uncollected March sales and $21,000 represents uncollected April sales. Prepare a schedule of budgeted cash collections from sales for May, June, and July. Include a three-month summary of estimated cash collections.

Perrier, Inc.

Schedule of Budgeted Cash Collections

Quarterly by MonthsMayJuneJulyTotalTotal Cash receipts:Answer

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