BMT Corporation has forecast credit sales for the first quarter of the year as:

Question

BMT Corporation has forecast credit sales for the first quarter of the year as: December ...

BMT Corporation has forecast credit sales for the first quarter of the year as:

December       (actual)                        $150,000

January            (estimate)                     90,000

February          (estimate)                      75,000

March             (estimate)                   100,000

Experience has shown that 30 percent of sales receipts are collected in the month of sale, 65 percent in the following month, and 5 percent are never collected.

a) Prepare a schedule of cash receipts for BMT Corporation covering the first quarter (January through March). For each of those three months, calculate the amount of cash the company expects to COLLECT from customers.

Explanation / Answer

Hi,

Please find the detailed answer as follows:

Schedule of Cash Receipts:

Notes:

December Sales Collected in January = 150000*65% = 97500

January Sales Collected in January = 90000*30% = 27000

January Sales Collected in February = 90000*65% = 58500

February Sales Collected in February = 75000*30% = 22500

February Sales Collected in March = 75000*65% = 48750

March Sales Collected in March = 100000*30% = 30000

Thanks.

January February March December Sales Collected in January 97500 January Sales Collected in January 27000 January Sales Collected in February 58500 February Sales Collected in February 22500 February Sales Collected in March 48750 March Sales Collected in March 30000 Total Cash Collections 124500 81000 78750

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