All sales at Alaska Company are on credit. The company is preparing a cash budget for November. The following information on accounts receivable collections is available from customer payment history: Percent of current month’s sales collected this month 20% Percent of prior month’s sales collected this month 62 Percent of sales two months prior to current month collected this month 10 Percent of sales three months prior to current month collected this month 5 The remaining 3 percent is not collected and is written off as bad debts. Sales to date are as follows: November (estimated) $ 270,000 October 610,000 September 240,000
Master Budget
A master budget can be defined as an estimation of the revenue earned or expenses incurred over a specified period of time in the future and it is generally prepared on a periodic basis which can be either monthly, quarterly, half-yearly, or annually. It helps a business, an organization, or even an individual to manage the money effectively. A budget also helps in monitoring the performance of the people in the organization and helps in better decision-making.
Sales Budget and Selling
A budget is a financial plan designed by an undertaking for a definite period in future which acts as a major contributor towards enhancing the financial success of the business undertaking. The budget generally takes into account both current and future income and expenses.
All sales at Alaska Company are on credit. The company is preparing a
| Percent of current month’s sales collected this month | 20% |
|---|---|
| Percent of prior month’s sales collected this month | 62 |
| Percent of sales two months prior to current month collected this month | 10 |
| Percent of sales three months prior to current month collected this month | 5 |
The remaining 3 percent is not collected and is written off as
| November (estimated) | $ 270,000 |
|---|---|
| October | 610,000 |
| September | 240,000 |
| August | 680,000 |
Required:
What are the estimated cash receipts from accounts receivable collections in November?
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