Budgeting Cash Collections Spencer Consulting, which invoices its clients on terms 2/10, n/30, had credit sales for May and June of $175,000 and $200,000, respectively. Analysis of Spencer's operations indicates that the pattern of customers' payments on account is as follows (percentages are of total monthly credit sales): Receiving Discount Beyond Discount Period Totals In month of sale 50% 20% 70% In month of following sale 15% 10% 25% Uncollectible accounts, returns, and allowances 5% 100% Determine the estimated cash collected on customers' accounts in June. $Answer
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.
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Budgeting Cash Collections
Spencer Consulting, which invoices its clients on terms 2/10, n/30, had credit sales for May and June of $175,000 and $200,000, respectively. Analysis of Spencer's operations indicates that the pattern of customers' payments on account is as follows (percentages are of total monthly credit sales):
| Receiving Discount | Beyond Discount Period | Totals | |||||
|---|---|---|---|---|---|---|---|
| In month of sale | 50% | 20% | 70% | ||||
| In month of following sale | 15% | 10% | 25% | ||||
| Uncollectible accounts, returns, and allowances | 5% | ||||||
| 100% |
Determine the estimated cash collected on customers' accounts in June.
$Answer
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