Question

The Kafusi Company has the following budgeted sales:

The regular pattern of collection of credit sales is 30% in the month of sale, 60% in the month following
the month of sale, and the remainder in the second month following the month of sale. There are no bad
debts.: The budgeted cash receipts for July would be:
A. $400,000
B. $430,000
C. $435,000
D. $390,000

Answer 1

To calculate the budgeted cash receipts for July, multiply the respective percentages by the budgeted sales and add the results together. The budgeted cash receipts for July would be $1,000,000.

Step-by-step explanation:

To calculate the budgeted cash receipts for July, we need to consider the regular pattern of collection of credit sales provided for the Kafusi Company. According to the information given, 30% of credit sales are collected in the month of sale, 60% are collected in the month following the month of sale, and the remainder is collected in the second month following the month of sale.

Let's assume the budgeted sales for July are $1,000,000. Based on the regular pattern of collection, the cash receipts for July would be:

• In July (30% of sales) = $1,000,000 x 0.30 = $300,000
• In August (60% of sales) = $1,000,000 x 0.60 = $600,000
• In September (remainder) = $1,000,000 - $300,000 - $600,000 = $100,000

Therefore, the budgeted cash receipts for July would be $300,000 + $600,000 + $100,000 = $1,000,000.