Cash Receipts The sales budget for Perrier Inc. is forecasted as follows: Month

Question

Cash Receipts The sales budget for Perrier Inc. is forecasted as follows: Month Sales Revenue May $ 120,000 June 160,000 July 180,000 August 120,000 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: 50 percent in the month of sale. 25 percent in the month following sale. 20 percent in the second month following sale. 5 percent uncollectible. The company gives a 2 percent cash discount for payments made by customers during the month of sale. The accounts receivable balance on April 30 is $24,000, of which $7,000 represents uncollected March sales and $17,000 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. Perrier, Inc. Schedule of Budgeted Cash Collections Quarterly by Months May June July Total Total Cash receipts: $Answer 60,420 Incorrect $Answer 71,501 Incorrect $Answer 80,439 Incorrect $Answer 0 IncorrectIncorrect The correct answer is: 340300 0.00 points out of 1.00

Explanation / Answer

Ans) Perrier Inc. March April Accounts Receivable on 30th April $      7,000.00 $    17,000.00 Sales Budget May June July Total Sales Revenue $ 120,000.00 $ 160,000.00 $ 180,000.00 $     460,000.00 Perrier Inc. Schedule of Budgeted Cash Collection May June July Total Sales in March $      5,600.00 $          5,600.00 Sales in April $      8,500.00 $      6,800.00 $       15,300.00 Sales in May $    58,800.00 $    30,000.00 $    24,000.00 $     112,800.00 Sales in June $    78,400.00 $    40,000.00 $     118,400.00 Sales in July $    88,200.00 $       88,200.00 Total Cash collection $    72,900.00 $ 115,200.00 $ 152,200.00 $ 340,300.00 Working March: On 30th April Accounts Receivable relates to march is $7000 it means all belong to for the month of may ,i.e 25%,but in may we only collect 20% & 5% are uncollectible April: On 30th April Accounts Receivable realtes to $17000,it means it is 50% because 50% we already received in the month of April.

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