### Question 32**Pasta Disasta, Inc.** is preparing its master budget for its first quarter of business. It expects to sell 3,000 pizzas at $8 per pizza per month. It expects to collect 95% of the sales in the month of the sale and 5% in the following month. Calculate the amount of cash collections for its first quarter.### Instructions- Click **Save and Submit** to save and submit.- Click **Save All Answers** to save all answers.### Context and CalculationAssuming that the total sales for the first three months are accrued and a portion is collected in the following months, we can break down the problem as follows:1. **Monthly Sales Calculation:** - Sales per month: 3,000 pizzas * $8 = $24,0002. **Cash Collection Schedule:** - 95% of $24,000 (collected in the month of sale): $24,000 * 0.95 = $22,800 - 5% of $24,000 (collected in the following month): $24,000 * 0.05 = $1,2003. **Cash Collections for Each Month:** - **Month 1:** - Collections: $22,800 (95% of $24,000 for Month 1) - **Month 2:** - Collections: $22,800 (95% of $24,000 for Month 2) + $1,200 (5% of $24,000 for Month 1) = $24,000 - **Month 3:** - Collections: $22,800 (95% of $24,000 for Month 3) + $1,200 (5% of $24,000 for Month 2) = $24,0004. **Total Cash Collections for the First Quarter:** - Month 1: $22,800 - Month 2: $24,000 - Month 3: $24,000 - **Total: $22,800 + $24,000 + $24,000 = $70,800**Thus, the amount of cash collections for the first quarter is $70,800.### NoteThis question requires an understanding of budgeting and cash flow management which are critical skills in financial planning.

Financial budgets: Financial budgets are prepared in order to ascertain the resources required to…

QUESTION 32 Pasta Disasta, Inc. is preparing its master budget for its first quarter of business. It expects to sell 3,000 pizzas at $8 per pizza per month. It expects to collect 95% of the sales in the month of the sale and 5% in the following month. Calculate the amount of cash collections for its first quarter.

QUESTION 32 Pasta Disasta, Inc. is preparing its master budget for its first quarter of business. It expects to sell 3,000 pizzas at $8 per pizza per month. It expects to collect 95% of the sales in the month of the sale and 5% in the following month. Calculate the amount of cash collections for its first quarter.

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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