Question

Mikail ​Reeds, a manufacturer of​ saxophone, oboe, and clarinet​ reeds, has projected sales to be $ 896 comma 000 in​ October, $ 968 comma 000 in​ November, $ 1 comma 055 comma 000 in​ December, and $ 934 comma 000 in January. Mikail​'s sales are 30​% cash and 70​% credit. The​ company's collection history indicates that credit sales are collected as​ follows: 25% in the month of the sale 65% in the month after the sale 8% two months after the sale 2% are never collected 1. Prepare a sales budget for all four months, showing the breakdown between cash and credit sales. 2. Prepare a cash collections budget for December and January. Round all answers up to the nearest dollar.

Answer 1

SALES BUDGET

OCTOBER NOVEMBER DECEMBER JANUARY

sales $896,000 $968,000 $1,055,000 $934,000

Cash $268,800 $290,400 $316,500 $280,200

Credit $627,200 $677,600 $738,500 $653,800

CASH BUDGET

OCT NOV DEC JAN

Sales $ 896,000 $968,000 $ 1,055,000 $934,000

Current $ 425,600 $459,800 $ 501, 125 $443,650

Previous $407,680 $ 440,440 $480,025

two months $ 50,176 $54,208

Total $1,321,600 $1,835,480 $ 2,046,741 $1,911,883

Step-by-step explanation:

sales budget we multiply the sals by 30% for cash and by 70% for credit

For collected in the current month, we add the cash sales and the 25% of the credit sales

Then, for collected from previous month:

we multiply the credit sales of the previous month by 65%

Last for the two months sales we multiply by 8% two months before