The sales budget for your company in the coming year is based on a quarterly gro

Question

The sales budget for your company in the coming year is based on a quarterly growth rate of 10 percent with the first-quarter sales projection at $225 million. In addition to this basic trend, the seasonal adjustments for the four quarters are 0, $16, $8, and $21 million, respectively. Generally, 50 percent of the sales can be collected within the quarter and 45 percent in the following quarter; the rest of the sales are bad debt. The bad debts are written off in the second quarter after the sales are made. The beginning accounts receivable balance is $104 million. Assuming all sales are on credit, compute the cash collections from sales for each quarter.

Quarter 1    Quarter 2     Quarter 3    Quarter 4

Collected within quarter $ $ $    $

Collection from previous quarter $ $ $ $       

Cash collections from sales $ $ $ $       

Explanation / Answer

Statement showing collections Particulars Q1 Q2 Q3 Q4 Sales            225,000,000.00            247,500,000.00            272,250,000.00            299,475,000.00 Seasonal Adjustment                                      -              (16,000,000.00)              (8,000,000.00)              21,000,000.00 Net Sales            225,000,000.00            231,500,000.00            264,250,000.00            320,475,000.00 Collection in same Quarter@50%            112,500,000.00            115,750,000.00            132,125,000.00            160,237,500.00 Collection in next Quarter@45%            101,250,000.00            104,175,000.00            118,912,500.00 Collection of AR = 104m/.50 *.45              93,600,000.00 Total Collection            206,100,000.00            217,000,000.00            236,300,000.00            279,150,000.00

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