A Japanese clothing wholesaler was preparing budget for the first quarter of 20x

Question

A Japanese clothing wholesaler was preparing budget for the first quarter of 20x2. Forecast sales are in thousands of dollar Sales arc 20% cash and 80% on credit. Fifty percent of the credit account are collected in month of sales, 40S in the month following of sales, and 10% in the following month. No uncollectible account are anticipated Accounts receivable x the beginning of 20x2 are $94 million (10% of November credit sales of $160,000 and 50% of December credit sales of $156 million.) Prepare a schedule showing sales and cash collection for January, February, and March, 20 x 2.

Explanation / Answer

Statement showing computations (in 000) Particulars January February March Total Sales          180,000.00          210,000.00              240,000.00                       630,000.00 Cash Sales @20%   a            36,000.00            42,000.00                48,000.00                       126,000.00 Credit Sales @80%   b          144,000.00          168,000.00              192,000.00                       504,000.00 Collection in same month @50% c            72,000.00            84,000.00                96,000.00                       252,000.00 Collection in next month @40% d            57,600.00                67,200.00                       124,800.00 Collection in second month @10% e                14,400.00                          14,400.00 Collection ofNovember sales f            16,000.00                          16,000.00 Collection ofDecember sales g            62,400.00            15,600.00                          78,000.00 Total Collections = a+c+d+e+f+g          186,400.00          199,200.00              225,600.00                       611,200.00

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