Question

Casa Development, Inc. has budgeted sales revenues as follows: Budgeted Sales Revenues January $55,000 February 75,000 March 90,000 April 80,000 May 60,000 June 35,000 Past experience has indicated that 80% of sales each month are on credit and that collection of credit sales occurs as follows: 60% in the month of sale, 30% in the month following the sale, and 5% in the second month following the sale. The other 5% is uncollectible. Prepare a schedule which shows expected cash receipts from sales for the months of April, May, and June.

Answer 1

Answer:

Expected cash receipts from sales for the months of April, May, and June are  63,000 ,51,600 and 34,400

Explanation:

As you can see we apply the percentages of collection of 60%, 30% and 5% to each month credit sales  to get the total estimated cash collections.

Casa Development, Inc.

Budgeted Cash Schedule

               January   February      March     April        May        June

Revenues $55,000  75,000    90,000   80,000  60,000     35,000

Credit Sales  80%

Credit Sales  44000  60,000   72,000  64,000   48,000      28,000

Collections    60%          30%             5%

January

44000           26,400   13,200    2,200

Feb                               60%          30%             5%

60,000                         36000    18000         3000

Mar                                                   60%          30%             5%

72,000                                         43,200        21,600      3600

Apr                                                                    60%          30%             5%

64000                                                            38400         19200       3,200

May                                                                                    60%          30%            

48,000                                                                              28,800    14,400

June                                                                                                      60%

28,000                                                                                               16,800

Total Cash Collections                             63,000      51,600       34,400