M8-10 Preparing Data for the Cash Budget LO [8-4] Crew Clothing (CC) sells women

Question

M8-10 Preparing Data for the Cash Budget LO [8-4] Crew Clothing (CC) sells women's resort casual clothing to high-end department stores and in its own retail boutiques. CC expects sales for January, February, and March to be $390,000, $450,000, and $470,000, respectively. Twenty percent of CC's sales are cash, with the remainder collected evenly over two months. During December, CC's total sales were $700,000. CC is beginning its budget process and has asked for your help in preparing the cash budget. Compute CC's expected cash receipts from customers for each month. January February March Budgeted Cash Receipts

Explanation / Answer

Expected cash receiptss from cusstomers is as calculated below:

Working:

Crew Clothing Schedule of expected Cash collections For the quarter ended March 31 Month Particulars January February March Total Cash Sales 78,000 90,000 94,000 262,000 Credit sates December Credit Sales (700,000*.8*.5) 280,000 280000 January Credit sales 156000 156,000 312000 February Credit Sales 180,000 180000 March Credit Sales 0 Total collections 358,000 246,000 430,000 1,034,000

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