Yung Reeds, a manufacturer of saxophone, oboe, and clarinet reeds, has projected sales to be $900,000 in October, $954,000 in November, $1,040,000 in December, and $924,000 in January. Yung’s sales are 20% cash and 80% on credit. Yung’s collection history indicates that credit sales are collected as follows:
25% in the month of the sale
60% in the month after the sale
14% two months after the sale
1% 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.