Valcor company produces a product which has peak sales in March of each year. The companys budgeted sales for the first quarter of 2013 are given below:

January February March Total

Budgeted sales $50,000 $65,000 $75,000 $190,000

In order to have data available for preparing a cash budget, the company is keen to determine the budgeted cash collections from sales. To this end, the following information has been assembled:

Collections on sales:

60% in month of sale

30% in month following sale

8% in second month following sale

2% uncollectable

The company gives a 2 percent cash discount for payments made by customers during the month of sale. The account receivable balance to start the year is $22,000, of which $4,000 represents uncollected November sales and $18,000 represents uncollected December sales.

Required:

What were the total sales for November? For December?

Prepare a schedule showing the budgeted cash collections from sales, by month and in total, for the three-month period.

In structuring a cash budget, what important factors must be considered in planning cash collection from sales? In planning cash disbursement from suppliers? Discuss. Your discussion must be supported by the relevant readings and real world examples. You must disclose the source of your information