Question

Jackson Company has developed the following sales projections for the calendar year:

May $108,000
June 128,000
July 148,000
August 168,000
September 158,000
October 138,000

Normal cash collection experience has been that 50% of sales is collected during the month of sale and 45% in the month following the sale. The remaining 5% of sales are never collected. Jackson's budgeted cash collections for the third calendar quarter are: _______

Answer 1

Total cash collection 3rd quarter= $436,800

Step-by-step explanation:

We need to calculate the cash collection for each month of the third quarter:

Cash collection July:

Sales from June= 128,000*0.45= 57,600

Sales from July= 148,000*0.50= 74,000

Total cash collection July= $131,600

Cash collection August:

Sales from July= 148,000*0.45= 66,600

Sales from August= 168,000*0.5= 84,000

Total cash collection August= $150,600

Cash collection September:

Sales from August= 168,000*0.45= 75,600

Sales from September= 158,000*0.5= 79,000

Total cash collection September= $154,600

Total cash collection 3rd quarter= $436,800