Solution-Prepare a schedule of budgeted cash collections

Prepare a schedule of budgeted cash collections from sales

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Reference no: EM132736107

Cash ReceiptsThe sales budget for Perrier Inc. is forecasted as follows:

Month Sales Revenue

May $100,000

June 170,000

July 180,000

August 120,000

To make a cash budget, the company must determine the budgeted cash collections from sales. Historically, the following trend has been established regarding cash collection of sales:

60 percent in the month of sale.
20 percent in the month following sale.
15 percent in the second month following sale.
5 percent uncollectible.

Problem 1: The company gives a 1 percent cash discount for payments made by customers during the month of sale. The accounts receivable balance on April 30 is $27,000, of which $6,000 represents uncollected March sales and $21,000 represents uncollected April sales. Prepare a schedule of budgeted cash collections from sales for May, June, and July. Include a three-month summary of estimated cash collections.

Reference no: EM132736107

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Prepare a schedule of budgeted cash collections from sales

Reference no: EM132736107

Reference no: EM132736107

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