Exercise 10-12 Lawn Retailers expects credit sales in the next quarter as follow

Question

Exercise 10-12 Lawn Retailers expects credit sales in the next quarter as follows: April $87,800 May 81,800 June 118,000 Prior experience has shown that 66 percent of a month's sales are collected in the month of sale, 24 percent are collected in the month following sale, and the remaining 10 percent are collected in the second month following sale. February and March sales were $84,900 and $100,000, respectively Estimate budgeted cash receipts for April, May, and June. Collection of credit sales April Collection of February sales Collection of March sales May June Collection of April sales Collection of May sales Collection of June sales

Explanation / Answer

Note:

1. Collection for February : 66% is collected in February, 24% in March and 10% in April.

2. Collection for March : 66% is collected in March, 24% in April and 10% in May

3. Collection for April : 66% is collected in April, 24% in May and 10% in June

4. Collection for May : 66% is collected in May, 24% in June and 10% in July

5. Collection for June : 66% is collected in June , 24% in July and 10% in August

Collection of Credit sales April May June Collection of February Sales 8,490 -    -    Collection of March Sales 24,000 10,000 -    Collection of April Sales 57,948 21,072 8,780 Collection of May Sales -    53,988 19,632 Collection of June Sales -    -    77,880 90,438 85,060 106,292

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