Question

Grover has forecast sales to be $129,000 in February, $137,000 in March, $156,000 in April, and $148,000 in May. The average cost of goods sold is 80% of sales. All sales are on made on credit and sales are collected 60% in the month of sale, and 40% the month following. What are budgeted cash receipts in March?

Answer 1

$148,400

Step-by-step explanation:

The computation of the budgeted cash receipts in March is shown below:

= Percentage given × March sales + Following percentage given × February sales

= 60% × $156,000 + 40% × $137,000

= $93,600 + $54,800

= $148,400

Since all sales are made on credit, so we simply do the percentage allocated to the months. The other months sales are ignored as it is not relevant for the computation part