Budgeted Cash Collections, Budgeted Cash Payments Historically, Ragman Company has had no significant bad debt experience with its customers. Cash sales have accounted for 20 percent of total sales, and payments for credit sales have been received as follows: 40 percent of credit sales in the month of the sale 35 percent of credit sales in the first subsequent month 20 percent of credit sales in the second subsequent month 5 percent of credit sales in the third subsequent month The forecast for both cash and credit sales is as follows. January $185,000 February 180,000 March 192,000 April May 196,000 200,000 Required: 1. What is the forecasted cash inflow for Ragman Company for May? 2. Due to deteriorating economic conditions, Ragman Company has now decided that its cash forecast should include a bad debt adjustment of 2 percent of credit sales, beginning with sales for the month of April. Because of this policy change, what will happen to the total expected cash inflow related to sales made in April? (CMA adapted)
Budgeted Cash Collections, Budgeted Cash Payments Historically, Ragman Company has had no significant bad debt experience with its customers. Cash sales have accounted for 20 percent of total sales, and payments for credit sales have been received as follows: 40 percent of credit sales in the month of the sale 35 percent of credit sales in the first subsequent month 20 percent of credit sales in the second subsequent month 5 percent of credit sales in the third subsequent month The forecast for both cash and credit sales is as follows. January $185,000 February 180,000 March 192,000 April May 196,000 200,000 Required: 1. What is the forecasted cash inflow for Ragman Company for May? 2. Due to deteriorating economic conditions, Ragman Company has now decided that its cash forecast should include a bad debt adjustment of 2 percent of credit sales, beginning with sales for the month of April. Because of this policy change, what will happen to the total expected cash inflow related to sales made in April? (CMA adapted)
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Budgeted Cash Collections, Budgeted Cash Payments
Historically, Ragman Company has had no significant bad debt experience with its customers. Cash sales have accounted for 20 percent of total sales, and payments for
credit sales have been received as follows:
40 percent of credit sales in the month of the sale
35 percent of credit sales in the first subsequent month
20 percent of credit sales in the second subsequent month
5 percent of credit sales in the third subsequent month
The forecast for both cash and credit sales is as follows.
$185,000
180,000
192,000
196,000
200,000
January
February
March
April
May
Required:
1. What is the forecasted cash inflow for Ragman Company for May?
2. Due to deteriorating economic conditions, Ragman Company has now decided that its cash forecast should include a bad debt adjustment of 2 percent of credit sales,
beginning with sales for the month of April. Because of this policy change, what will happen to the total expected cash inflow related to sales made in Apri? (CMA
adapted)
Transcribed Image Text:2. Due to deteriorating economic conditions, Ragman Company has now decided that its cash forecast should include a bad debt adjustment of 2 percent of credit sales,
beginning with sales for the month of April. Because of this policy change, what will happen to the total expected cash inflow related to sales made in April? (CMA
adapted)
Cash will (
by
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