Example 3: Cash Budget a ABC Company's revenues tend to go through a quarterly cycle. The three- month period sales is as follows ($000). Jan. Feb. Mar. Apr. $500 $600 $700 May. June Sales Historically, ABC Company collects its receivables according to the following pattern Months after sale 1 2 3 % collected 60% 30% 8% Assume no prompt payment discount is offered. Note that the total collected is 98%, which shows that 2% of sales turn out to be bad debts. Required: Prepare cash budget (projection of receivables) for the first quarter. Solution: Apr. May June Jan. Feb. Mar $500 $600 $700 Sales Collections from Sales made in: Jan. Feb. Mar. Total Collections