Cash Receipts The sales budget for Perrier Inc. is forecasted as follows: To pre
ID: 2416079 • Letter: C
Question
Cash Receipts
The sales budget for Perrier Inc. is forecasted as follows:
To prepare a cash budget, the company must determine the budgeted cash collections from sales. Historically, the following trend has been established regarding cash collection of sales:
60 percent in the month of sale.
20 percent in the month following sale.
15 percent in the second month following sale.
5 percent uncollectible.
The company gives a 1 percent cash discount for payments made by customers during the month of sale. The accounts receivable balance on April 30 is $25,000, of which $6,000 represents uncollected March sales and $19,000 represents uncollected April sales. Prepare a schedule of budgeted cash collections from sales for May, June, and July. Include a three-month summary of estimated cash collections.
Month Sales Revenue May $140,000 June 140,000 July 180,000 August 120,000Explanation / Answer
Perrier, Inc. Schedule of Budgeted Cash Collections Quarterly by Months May June July Total Total Cash receipts: Sales 140000 140000 180000 460000 Inflow of Cash 60 % in the current month sale 84000 84000 108000 276000 20 % in the Previous month sale 4500 28000 28000 60500 (Uncollected March Sales) (6000*15/20) 15 % in the Second Previous month sale 9500 7125 21000 37625 (Uncollected April Sales) (Uncollected April Sales) (19000*20/40) (19000*15/40) Total Inflow 98000 119125 157000 374125 Less: Discount Given @ 1% on current month 1400 1400 1800 4600 Net Inflow of Cash 96600 117725 155200 369525
Related Questions
drjack9650@gmail.com
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.