Reeds, a manufacturer of saxophone, oboe, and clarinet reeds, has projected sales to be 904000 in October ,960000 in November ,1060000 in December, and 930000 in January. Alixsander's sales are 30% cash and 70% credit. The company's collection history indicates that credit sales are collected as follows:

20% in the month of the sale

65% in the month after the sale

10% two months after the sale

5% 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.

Alexander 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.

Alexander Reeds

Budgeted Cash Collections from Customers

For the Months of December and January

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December January

Cash sales
Collection of credit sales:
20% of current month credit sales
65% of prior month credit sales
10% of credit sales two months ago
Total collection of credit sales
Total cash collections