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. (Hint: For collections of March and April receivables, start by determining total sales for the month. Assume the normal sales pattern.) 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: $ 96,600 × $ 117,725 x $ 155,200 x $ 369,525 *

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. (Hint: For collections of March and April receivables, start by determining total sales for the month. Assume the normal sales pattern.) 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: $ 96,600 × $ 117,725 x $ 155,200 x $ 369,525 *

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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