On October 1 of the current year, Molloy Corporation prepared a cash budget for

Question

On October 1 of the current year, Molloy Corporation prepared a cash budget for October, November, and December. All of Molloy's sales are made on account. The following information was used in preparing estimated cash collections: August sales (actual) $ 39,000 September sales (actual) $ 49,000 October sales (estimated) $ 19,000 November sales (estimated) $ 69,000 December sales (estimated) $ 59,000 Approximately 70% of all sales are collected in the month of the sale, 25% is collected in the following month, and 5% is collected in the month thereafter.

Explanation / Answer

Answer:

Particulars August September October November December Sales 39000 49000 19000 69000 59000 Collection from sales: 70% collected in the month of sale 27300 34300 13300 48300 41300 25% collected in the following month 9750 12250 4750 17250 5% collected in the month thereafter 1950 2450 950 Total collection from sales 27300 44050 27500 55500 59500

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