Question

ABC Company collects sales as follows: 30 percent in the month of sale, 60 percent in the next month, and 8 percent in the second month after the sale; 2 percent is uncollectable. Budgeted sales are as follows: March = $22,000; April = $19,000; May = $23,000. Budgeted cash collections for March sales will be anticipated as follows: March = $______ . April = $______ . May = $______.

Answer 1

ABC Company collects sales as follows: 30 percent in the month of sale, 60 percent in the next month, and 8 percent in the second month after the sale; 2 percent is uncollectable. Budgeted cash collections for March sales will be anticipated as follows: March = $22,000, April = $14,720, and May = $1,520.

Step-by-step explanation:

ABC Company collects sales as follows: 30 percent in the month of sale, 60 percent in the next month, and 8 percent in the second month after the sale; 2 percent is uncollectable. Budgeted sales are as follows: March = $22,000; April = $19,000; May = $23,000. Budgeted cash collections for March sales will be anticipated as follows:

1. March = $22,000 (30% of $22,000 = $6,600)
2. April = $19,000 (60% of $22,000 = $13,200) + (8% of $19,000 = $1,520)
3. May = (8% of $19,000 = $1,520)