To determine The cash collections budget for the month of January, February, and March and total cash collection for the quarter ended on March 31. Explanation Cash collection budget: This budget is prepared for the estimation of the cash collection for the period. This includes probable cash from the sources. Statement showing calculation for budgeted monthly cash collection and total cash collection for the quarter ending as on March 31: Company M Operating expenses budget For the quarter ended March 31 Month Particulars January (Amount in $) February (Amount in $) March (Amount in $) 1 st Quarter (Amount in $) Budgeted sales (a) 15,500 12,000 14,000 41,500 Credit sales ( b = a × 80 % ) 12,400 9,600 11,200 33,200 Cash sales in current month ( c = a × 20 % ) 3,100 2,400 2,800 8,300 Credit sales collection 30% of current month ( d = b × 30 % ) 3,720 2,880 3,360 9,960 60% of credit sales made one month ago (e) 5,040(1) 7,440(3) 5,760(5) 18,240 6% of credit sales made two month ago (f) 792(2) 504(4) 744(6) 2,040 Total cash collection ( c + d + e + f ) 12,652 13,224 12,664 38,540 Table (1) Budgeted cash collection for the month of January, February, and March have been calculated as $12,652, $13,224, and $12,664 Total of budgeted cash collection for quarter ending on March has been calculated as $38,540. Given: Cash sell is 20%. Credit sell is 80%. Collection schedule is like 30% in same month, 60% in next month and 6% 2 nd next month. Sell in the month of November is $16,500 and in December is $10,500

Managerial Accounting, Student Value Edition Plus NEW MyLab Accounting with Pearson eText -- Access Card Package (4th Edition)

4th Edition

ISBN: 9780133849332

Author: Karen W. Braun, Wendy M. Tietz

Publisher: PEARSON

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Chapter 9, Problem 9.10SE

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The cash collections budget for the month of January, February, and March and total cash collection for the quarter ended on March 31.

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