Getty Company expects sales for the first three months of next year to be $185,0

Question

Getty Company expects sales for the first three months of next year to be $185,000, $230,000 and $300,000, respectively. Getty expects 20 percent of its sales to be cash and the remainder to be credit sales. The credit sales ill be collected as follows: 10 percent in the month of the sale and 90 percent in the following month. Compute a schedule of Getty's cash receipts for the months of February and March. Answer is complete but not entirely correct. February March Budgeted Cash Receipts 800,000 556,000

Explanation / Answer

February March Cash sales 46,000 (230,000*20%) 60,000 (300,000*20%) Credit sales collected in the month of sale 18,400 (230,000*80%*10%) 24,000 (300,000*80%*10%) Credit sales collected in the month following the sale 133,200 (185,000*80%*90%) 165,600 (230,000*80%*90%) Budgeted cash receipts 197,600 249,600 January February March Cash sales 108,000 (540,000*20%) 120,000 (600,000*20%) 124,000 (620,000*20%) Credit sales collected in the month of sale 216,000 (540,000*80%*50%) 240,000 (600,000*80%*50%) 248,000 (620,000*80%*50%) Credit sales collected in the month following the sale 340,000 (850,000*80%*50%) 216,000 (540,000*80%*50%) 240,000 (600,000*80%*50%) Budgeted cash receipts 664,000 576,000 612,000

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