The following is the sales budget for Tesoro Azul, Inc., for the first quarter o

Question

The following is the sales budget for Tesoro Azul, Inc., for the first quarter of 2016:

Credit sales are collected as follows:
  
60 percent in the month of the sale
30 percent in the month after the sale
10 percent in the second month after the sale
  
The accounts receivable balance at the end of the previous quarter was $96,000 ($78,800 of which was uncollected December sales).
  
a. Compute the sales for November.

b. Compute the sales for December.

c. Compute the cash collections from sales for each month from January through March.

Explanation / Answer

Answer =A) Account receivable for the last quarter = $               96,000 Uncollectable for December = $               78,800 Balance is for the month of November = $               17,200 60% is collected in the month of sale and 30% in next months and 10% in second month of sale Balance for the month of November = $ 17,200 = 10% Sales for the month of November = $ 17,200 X 100 / 10 = $           1,72,000 Anwwer = B) so, uncollectable of December = 30% + 10% = 40% = $ 78,800 Sales of December = $ 78,800 X 100 / 40 = $           1,97,000 CALCULATION OF CASH RECEIPT FROM CUSTOMER Nov, 17 Dec, 17 Jan-17 Feb-17 Mar-17 Sales / Expected Sales $       1,72,000 $        1,97,000 $        1,35,000 $        1,52,000 $         1,67,000 Cash Collecte in the same month= 60% (A) $       1,03,200 $        1,18,200 $           81,000 $           91,200 $         1,00,200 30% collected in the next month(B) $           51,600 $           59,100 $           40,500 $            45,600 10% collected in the next 2 month ('C) $           17,200 $           19,700 $            13,500 TOTAL (A+B+C) $        1,57,300 $        1,51,400 $         1,59,300

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