Question
Lions Ltd is preparing its cash budget for the month of May 2019. Sales are estimated to be 20% cash and 80% credit. Past experience
Lions Ltd is preparing its cash budget for the month of May 2019. Sales are estimated to be 20% cash and 80% credit.
Past experience has shown that debtors pay 50% in the month following a sale, 35% in the second month and 10% in the third month after the sale. 5% of the debtors are written off as bad debts in the fourth month after the sale.
Actual and estimated sales data for January to May 2019 are provided below.
Month Sales
January $50,000
February $40,000
March $35,000
April (estimated) $24,000
May (estimated) $50,000
Required
Calculate the estimated cash received from debtors in May 2019. (10 marks)
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