Question
Cash Receipts The sales budget for Perrier Inc. is forecasted as follows: Month Sales Revenue May $130,000 June 150,000 July 200,000 August 130,000 To prepare
Cash Receipts The sales budget for Perrier Inc. is forecasted as follows:
Month | Sales Revenue |
---|---|
May | $130,000 |
June | 150,000 |
July | 200,000 |
August | 130,000 |
To prepare 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 2 percent cash discount for payments made by customers during the month of sale. The accounts receivable balance on April 30 is $22,000, of which $7,000 represents uncollected March sales and $15,000 represents uncollected April sales. (Hint: For collections of March and April receivables, start by determining total sales for the month. Assume the normal sales pattern.)
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 Months | ||||
---|---|---|---|---|
May | June | July | Total | |
Total Cash receipts: | Answer | Answer | Answer | Answer |
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