Lightning-Bug Products Company is preparing a cash receipts schedule for the fou

Question

Lightning-Bug Products Company is preparing a cash receipts schedule for the fourth quarter of 200X. Total sales for August and September of 200X are $130,000 and $110,000, respectively.

Budgeted sales for the fourth quarter of 200X follow:

Oct.         Nov.           Dec.

Budgeted total sales                   $106,000   $125,000    $149,000

25% of sales are for cash; the remaining 75% are on account. Ten percent of the sales on account are collected in the month of sale, 70% in the month following the sale, and the remaining 20% in the second month following the sale. Lightning-Bug Products does not anticipate any uncollectible accounts.

Determine the cash collected in October:

$119,480

$112,080

$132,680

$111,700

$119,480

$112,080

$132,680

$111,700

Explanation / Answer

August September October November December Sales 130000 110000 106000 125000 149000 Cash Sales - 25% (A) 32500 27500 26500 31250 37250 On account Sales - 75% 97500 82500 79500 93750 111750     Current month -10 % on account sale (B) 9750 8250 7950 9375 11175     Previous month - 70% of on account sale © 68250 57750 55650 65625      2nd month - 20% on account sale (D) 19500 16500 15900 Cash collected ( A + B + C + D) 111700 112775 129950 Hence cash collected in October is 111700 Last option is correct

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