Question

Swifty Corporation estimates its sales at 190000 units in the first quarter and that sales will increase by 11000 units each quarter over the year. They have, and desire, a 25% ending inventory of finished goods. Each unit sells for $25. 40% of the sales are for cash. 70% of the credit customers pay within the quarter. The remainder is received in the quarter following sale. Cash collections for the third quarter are budgeted at

Answer 1

Answer:

$5,250,500

Explanation:

Budgeted cash collection for third quarter = Cash sales + Collection of credit sale of 3rd quarter + Collection of credit sale of 2nd quarter

Budgeted cash collection for third quarter = [(190,000+22,000)*$25*40%] + (212,000*$25*60%*70%) + (201,000*$25*60%*30%)

Budgeted cash collection for third quarter = $2,120,000 + $2,226,000 + $904,500

Budgeted cash collection for third quarter = $5,250,500