Example:

1. Royal Company is preparing budgets for the quarter ending June 30th. The selling price is $10 per unit. Budgeted sales for the next five months are:

April 20,000 units May 50,000 units June 30,000 units July 25,000 units August 15,000 units

All sales are on account. Royals collection pattern is 70% collected in the month of sale, 25% collected in the month following sale, 5% uncollectible. In April, the March 31st accounts receivable balance of $30,000 will be collected in full.

Prepare the sales budget and schedule of expected cash collections for the quarter ending June 30th.

4. Royal pays $0.40 per pound for its materials. One-half of a months purchases is paid for in the month of purchase; the other half is paid in the following month. The March 31 accounts payable balance is $12,000 and will be paid in full in April. Calculate expected cash disbursements.