Question

I am not understanding how to break these figures down quarterly. The examples in the textbook are done by quarters byt he assignment is asking for monthly figures: Duffy Corporation has prepared the following sales budget: Month Cash Sales Credit Sales May $16,000 $68,000 June 20,000 80,000 July 18,000 74,000 August 24,000 92,000 September 22,000 76,000 Collections are 40% in the month of sale, 45% in the month following the sale, and 10% two months following the sale. The remaining 5% is expected to be uncollectible. Required: Prepare a schedule of cash collections for July through September.

Answer 1

Schedule of cash collection

	July	August	September
Cash sales	18,000	24,000	22,000
From may credit sales	68,000 x 10% = 6,800	0	0
From June credit sales	80,000 x 45% = 36,000	80,000 x 10% = 8,000	0
From July credit sales	74,000 x 40% = 29,600	74,000 x 45% = 33,300	74,000 x 10% = 7,400
From August credit sales	0	92,000 x 40% = 36,800	92,000 x 45% = 41,400
From September credit sales	0	0	76,000 x 40% = 30,400
Total cash collection	$90,400	$102,100	$101,200

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