On October 1 of the current year, Molloy Corporation prepared a cash budget for

Question

On October 1 of the current year, Molloy Corporation prepared a cash budget for October, November, and December. All of Molloy's sales are made on account. The following information was used in preparing estimated cash collections:

August sales (actual)   $ 48,000
September sales (actual)   $ 58,000
October sales (estimated)   $ 28,000
November sales (estimated)   $ 78,000
December sales (estimated)   $ 68,000

Approximately 70% of all sales are collected in the month of the sale, 25% is collected in the following month, and 5% is collected in the month thereafter.
5. Required information
Budgeted collections from customers in October total:
$34,100.
$44,900.
$134,000.
$36,500.
6. Required information
Budgeted collections from customers in December total:
$68,500.
$67,100.
$58,500.
$174,000.

Explanation / Answer

Solution - Below is the data in the table as per the information given and the budgeted collection calculated

5. Required information
Budgeted collections from customers in October total:
$36,500.

6. Required information
Budgeted collections from customers in December total:
$68,500.

Aug Sept Oct Nov Dec A A E E E 1 Sales 48000 58000 28000 78000 68000 2 70% Collection for same month 33600 40600 19600 54600 47600 3 25% collection for Last month 12000 14500 7000 19500 4 5% collection for Last to last month 2400 2900 1400 C = 2+3+4 Budgeted collections from customers 36500 68500

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