Simpson Glove Company has made the following sales projections for the next six months. All sales are credit sales. March $54,000 April 63,000 May 45,000 June 60,000 July 71,000 August 75,000 Sales in January and February were $41,000 and $39,000, respectively. Experience has shown that of total sales receipts 10 percent are uncollectible, 45 percent are collected in the month of sale, 35 percent are collected in the following month, and 10 percent are collected two months after sale. Prepare a monthly cash receipts schedule for the firm for March through August.
Simpson Glove Company has made the following sales projections for the next six months. All sales are credit sales.
| March | $54,000 |
| April | 63,000 |
| May | 45,000 |
| June | 60,000 |
| July | 71,000 |
| August | 75,000 |
Sales in January and February were $41,000 and $39,000, respectively. Experience has shown that of total sales receipts 10 percent are uncollectible, 45 percent are collected in the month of sale, 35 percent are collected in the following month, and 10 percent are collected two months after sale.
Prepare a monthly cash receipts schedule for the firm for March through August.
Answer -
The Cash Receipts Schedule -
A cash receipts schedule/ budget shows the pattern and percentage in which a business is expecting to collect it's cash from its projected sales on the sales budget based on its past collection patterns.
In this question also collection percentage are given based on past experience.
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