The Kafusi Company has the following budgeted sales: April May June July Credit

Question

The Kafusi Company has the following budgeted sales: April May June July Credit Sales $320,000 $300,000 $350,000 $400,000 Cash Sales $70,000 $80,000 $90,000 $70,000 The regular pattern of collection of credit sales is 30% in the month of sale, 60% in the month following the month of sale, and the remainder in the second month following the month of sale. There are no bad debts. Prepare a schedule for the budgeted cash receipts for July. Compute the budgeted accounts receivable balance On May 31 by showing your comptations.

Explanation / Answer

a) Budget for July Cash reciept

Particulars Amount

Cash Sales of July $70,000

30% of credit sales of July $120,000 ( $400,000 X 30%)

60% of credit sales of June $210,000 ($350,000X 60%)

10% of credit sale of May $30,000 ($300,000 X 10%)

Total $430,000

b) Budgeted account receivable on 31 may

Particulars Amount

70% of credit sales of May $210,000 ($300,000 X 70%)

10% of credit sales of April $ 32,000 ($320,000X 10%)

Total    $242,000

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