Nassau Products is preparing a cash budget for April. The following information

Question

Nassau Products is preparing a cash budget for April. The following information on accounts receivable collections is available from past collection experience: Percent of current month’s sales collected this month 25 %, Percent of prior month’s sales collected this month 62%, Percent of sales two months prior to current month collected this month 7%, Percent of sales three months prior to current month collected this month 4%, The remaining 2 percent is not collected and is written off as bad debts. Credit sales to date are: April-estimated $ 240,000, March 216,000, February 180,000, January 214,000.

Required: What are the estimated cash receipts from accounts receivable collections in April?

Explanation / Answer

estimated cash receipts from accounts receivable collections in April are $215,080 Statemnt showing purchases in units and their payment Particulars Jan Feb Mar April Sales          214,000.00    180,000.00       216,000.00          240,000.00 Collection in Same month @25% (a)          53,500.00      45,000.00          54,000.00             60,000.00 Collection in next month @62% (b)    132,680.00       111,600.00          133,920.00 Collection in next to next month @7% (c)          14,980.00             12,600.00 Collection in next to next month @4% (d)               8,560.00 Total Collections a+b+c+d          215,080.00

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