To prepare a cash budget the company must determine the

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Reference no: EM13600590

The sales budget for Perrier Inc. is as forecasted as follows:
Month Sales Revenue

May $120,000
June 160,000
July 180,000
August 120,000

To prepare 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

The company gives a 2 percent cash discount for payments made by customers during the month if sale. The accounts receivable balance on April 30 is $24,000, of which $7,000 represents uncollected March sales and $17,000 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: EM13600590

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