Question

Music World reports the following sales forecast: August, $150,000; and September, $170,000. Cash sales are normally 40% of total sales and all credit sales are expected to be collected in the month following the date of sale. Prepare a schedule of cash receipts for September.

Answer 1

Answer and Explanation:

music world reports receipt budget for september month

sales $170,000

cash sales (40%*170,000) $68,000

collections of prior months (150,000*60%) $90,000

total cash receipts $158,000

note the following:

- cash sales are 40% of the total sales

- since 40% is cash sales, the 60% of total sales is the credit sales