(15) Apple was preparing its sales budget for the third quarter of 2014 followin

Question

(15) Apple was preparing its sales budget for the third quarter of 2014 following the release of iPhone 6. Forecast sales are as follows in millions of dollar. October $200 millions November $250 millions December $325 millions Sales are 40% cash and 60% on credit. Fifty-five percent of the credit accounts are collected in the month of sale, 30% in the following month, 10% in the 3rd month, and the balance is uncollectible and written off as bad debts. Accounts receivable at the end of September are $39.9 million (10% of August credit sales of $140 million and 30% of September credit sales of $175 milion). Prepare a schedule showing sales forecast and cash collections for the 3rd quarter 2014. August September October November December Sales $140 $175 $200 $250 $325 Cash Balance

Explanation / Answer

Sales Forecast

For the third quarter of 2014

Schedule of Expected Cash Collections:

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