Armidale Innovations operations manager, Henry, prepared the following sales bud
ID: 2800629 • Letter: A
Question
Armidale Innovations operations manager, Henry, prepared the following sales budget for the selected months of 2017:
Month Cash Sales ($) Credit Sales ($)
January 161,000 681,000
February 201,000 801,000
March 181,000 741,000
April 241,000 921,000
May 221,000 761,000
Cash collections history of the company shows that 41% of all credit sales are collected in the month of sale, 46% are collected in the month following the month of sale, and 11% is collected two months following the month of sale. The remaining 2% is uncollectible and treated as ‘bad debts’.
Required: You work under Henry who asks you to prepare a schedule of cash collections for March, April and May, 2017, showing the total for the three months in the ‘total’ column.
Must use the following format/table (show supporting calculations/working separately before or after the format/table):
March April May Total
Cash Sales …………………….
Collections from credit sales: From current month ………..
From previous month ………
From two months back ……..
Total collections (cash & credit):
Explanation / Answer
Schedule of cash collections for the March, April, MAy, 2017
Workings notes
801000*46%
March April May Total Cash sales 1,81,000 2,41,000 2,21,000 6,43,000 Collections for credit sales: from current month 3,03,810 3,77,610 3,12,010 9,93,430 From previous month 3,68,460 3,40,860 4,23,660 11,32,980 From two months back 74,910 88,110 81,510 2,44,530 Total collections (cash and credit) 9,28,180 10,47,580 10,38,180 30,13,940Related Questions
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