Kiel Center’s sales are all made on account. The firm’s collection experienc

Question

Kiel Center’s sales are all made on account. The firm’s collection experience has been that 35% of a month’s sales are collected in the month the sale is made, 55% are collected in the month following the sale, and 8% are collected in the second month following the sale. The sales forecast for the months of June through September is:

June………………………………………………………………………………………$140,000

July………………………………………………………………………………………..160,000

August…………………………………………………………………………………...170,000

September………………………………………………………………………………..195,000

Required:

Calculate the cash collections that would be included in the cash budgets for August and September.

Required:

Calculate the cash collections that would be

included in the cash budgets for August and September.

Explanation / Answer

Hi,

Please find the answer as follows:

Cash Collections for August = 8%*140000 + 55%*160000 + 35%*170000 = 158700

Cash Collections for September = 8%*160000 + 55%*170000 + 35%*195000 = 174550

Thanks.

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