Question

Cash Receipts The sales budget for Perrier Inc. is forecasted as follows: Month Sales Revenue May $140,000 June 140,000 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 1 percent cash discount for payments made by customers during the month of sale. The accounts receivable balance on April 30 is $25,000, of which $6,000 represents uncollected March sales and $19,000 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. Perrier, Inc. Schedule of Budgeted Cash Collections Quarterly by Months May June July Total Total Cash receipts:

Answer 1

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		May	Jun	July	Quarter
March Sale	$6,000/20%*15%	$        4,500			$        4,500
April Sale	$19,000/40%*20% and 15%	$        9,500	$        7,125		$      16,625
May Sale	60% (Less1% Disc),20%,15%	$      83,160	$      28,000	$      21,000	$   132,160
June Sale	60% (Less1% Disc),20%		$      83,160	$      28,000	$   111,160
Jul Sale	60% (Less1% Disc)			$   106,920	$   106,920
		$      97,160	$   118,285	$   155,920	$   371,365