F#12

Mikail

Reeds, a manufacturer of saxophone, oboe, and clarinet reeds, has projected sales to be

$896,000

in October,

$956,000

in November,

$1,060,000

in December, and

$926,000

in January.

Mikail's

sales are

30%

cash and

70%

credit. The company's collection history indicates that credit sales are collected as follows:

25% in the month of the sale

60% in the month after the sale

8% two months after the sale

7% are never collected

Requirements

1. Prepare a sales budget for all four months, showing the breakdown between cash and credit sales.

2. Prepare a cash collection budget for December and January. Round all answers up to the nearest dollar.

Requirement 1. Prepare a sales budget for all four months, showing the breakdown between cash and credit sales.

Mikail Reeds
Sales Budget
For the Four Months Ended January
	October	November	December	January
Cash sales
Credit sales
Total sales

Requirement 2. Prepare a cash collection budget for December and January. Round all answers up to the nearest dollar.

Mikail Reeds
Budgeted Cash Collections from Customers
For the Months of December and January
	December	January
Cash sales
Collection of credit sales:
25% of current month credit sales
60% of prior month credit sales
8% of credit sales two months ago
Total collection of credit sales
Total cash collections