On October 1 of the current year, Winston Corporation prepared a cash budget for
ID: 2379723 • Letter: O
Question
On October 1 of the current year, Winston Corporation prepared a cash budget for October, November, and December. All of Winston's sales are made on account. The following information was used in preparing estimated cash collections:
August sales (actual) ...........................................................
$45,000
September sales (actual) ......................................................
55,000
October sales (estimated) .....................................................
25,000
November sales (estimated)..................................................
75,000
December sales (estimated)..................................................
65,000
Approximately 60% of all sales are collected in the month of the sale, 30% is collected in the following month, and 10% is collected in the month thereafter.
12. Refer to the information above. Budgeted collections from customers in October total:
Use the following to answer questions 12-14:
On October 1 of the current year, Winston Corporation prepared a cash budget for October, November, and December. All of Winston's sales are made on account. The following information was used in preparing estimated cash collections:
August sales (actual) ...........................................................
$45,000
September sales (actual) ......................................................
55,000
October sales (estimated) .....................................................
25,000
November sales (estimated)..................................................
75,000
December sales (estimated)..................................................
65,000
Approximately 60% of all sales are collected in the month of the sale, 30% is collected in the following month, and 10% is collected in the month thereafter.
12. Refer to the information above. Budgeted collections from customers in October total:
Answer
13. Refer to the information above. Budgeted collections from customers in November total:
14. Refer to the information above. Budgeted collections from customers in December total:
August sales (actual) ...........................................................
$45,000
September sales (actual) ......................................................
55,000
October sales (estimated) .....................................................
25,000
November sales (estimated)..................................................
75,000
December sales (estimated)..................................................
65,000
Explanation / Answer
12. Budgeted collections from customers in October = 60% of October sales + 30% of September sales + 10% of August sales = 60%*25,000 + 30%*55,000 + 10%*45,000 = 36,000. So the answer is choice C
13. Budgeted collections from customers in November = 60% of November sales + 30% of October sales + 10% of September sales = 60%*75,000 + 30%*25,000 + 10%*55,000 = 58,000. So the answer is choice B
14. Budgeted collections from customers in December = 60% of December sales + 30% of November sales + 10% of October sales = 60%*65,000 + 30%*75,000 + 10%*25,000 = 64,000. So the answer is choice D
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