Duffy Corporation has prepared the following sales budget Month Cash Sales Credi

Question

Duffy Corporation has prepared the following sales budget

Month                                      Cash Sales              Credit Sales

May                                             $16,000                 $68,000

June                                              20,000                   80,000

July                                                18,000                   74,000

August                                            24,000                  92,000

September                                      22,000                  76,000

Collections are 40% in the month of sale, 45% in the month following the sale, and 10% two months following the sale. the remaining 5% is expected to be uncollectible.

Required: Prepare a schedule of cash collections for July through September and show all work.

Explanation / Answer

Particulars July August September Quarter Credit sales 74000 92000 76000 242000 Cash Sales 18000 24000 22000 64000 Received In the month of sale ( Credit Sale * 40%) 29600 36800 30400 96800 Received In the month following the sale(Credit sale *45%) 0 33300 41400 74700 Received In the second month following the sale 0 0 7400 7400 Credit sale of may month collected 6800 0 0 6800 Credit sale of june month collected 36000 8000 0 44000 Total Cash Collected 90400 102100 101200 293700

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