The management team of Vernon Modems, Inc. (VMI) wants to investigate the effect of several different growth rates on sales and cash receipts. Cash sales for the month of January are expected to be $180,000. Credit sales for January are expected to be $900,000. VMI collects 100 percent of credit sales in the month following the month of sale. Assume a beginning balance in accounts receivable of $864,000.

Required

Calculate the amount of sales and cash receipts for the months of February and March assuming a growth rate of 2 percent and 4 percent. The results at a growth rate of 1 percent are shown as an example.

Sales Budget
	Jan				Feb				Mar
Cash sales	$	180,000			$	181,800			$	183,618
Sales on account		900,000				909,000				918,090
Total budgeted sales	$	1,080,000			$	1,090,800			$	1,101,708
Schedule of Cash Receipts
Current cash sales	$	180,000			$	181,800			$	183,618
Plus collections from accts. rec.		864,000				900,000				909,000
Total budgeted collections	$	1,044,000			$	1,081,800			$	1,092,618

Use the following forms, assuming a growth rate of 2 percent and 4 percent: