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Prepare cash collection budget

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Reference no: EM132558925

Royal Company is preparing budgets for the quarter ending June 30.

Budgeted sales for the next five months are:

April 20,000 units

May 50,000 units

June 30,000 units

July 25,000 units

August 15,000 units.

The selling price is $10 per unit and all sales are on credit. However, the March 31 accounts receivable balance of $30,000 will be collected in full. Royal's collection pattern is:

  • 70% collected in the month of sale,
  • 25% collected in the month following sale,
  • 5% is uncollectible.

Requirements:

Question 1. Prepare sales budget

Question 2. Prepare cash collection budget

Reference no: EM132558925

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