The sales budget for Perrier Inc. is forecasted as follows: To prepare a cash bu

Question

The sales budget for Perrier Inc. is forecasted as follows:

To prepare a cash budget, the company must determine the budgeted cash collections from sales. Historically, the following trend has been established regarding cash collection of sales:

50 percent in the month of sale.

25 percent in the month following sale.

20 percent in the second month following sale.

5 percent uncollectible.

The company gives a 2 percent cash discount for payments made by customers during the month of sale. The accounts receivable balance on April 30 is $24,000, of which $7,000 represents uncollected March sales and $17,000 represents uncollected April sales.

Prepare a schedule of budgeted cash collections from sales for May, June, and July. Include a three-month summary of estimated cash collections.

Month Sales Revenue May $ 120,000 June 160,000 July 180,000 August 120,000

Explanation / Answer

Schedule of budgeted cash collections:

May June July Total Sales revenue $ 120,000 $ 160,000 $ 180,000 $ 460,000 Collection of March sales 5,600 April sales 8,500 6,800 May sales 58,800 30,000 24,000 June sales 78,400 40,000 July sales 88,200 Total $ 72,900 $ 115,200 $ 152,200 $ 340,300

Related Questions

Navigate

• Browse (All)
• Browse T
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.