Problem 6. 15 points

Band Instruments Company has the following sales budget for the first three months of the current year:

Month Sales Revenue

January $600,000 February 150,000 March 440,000

Historically, the following trend has been established regarding cash collection of sales:

65 percent in month of sale

25 percent in month following sale

8 percent in second month following sale

2 percent uncollectible

November and December sales were $100,000 and $200,000, respectively.

Required: Prepare a schedule of budgeted cash collections from sales for January, February, and March.

PLEASE PROVIDE EXPLANATION.