Question

On October 1st of the current year, Molloy Corporation prepared a cash budget for October, November, and December. All of Molloy sales are made on account. The following information was used in preparing estimated cash collections :

Aug sales (actual) 50,000
Sep sales (actual) 60,000
Oct sales. (estimated) 30,000
Nov sales (estimated) 80,000
Dec sales (estimated) 70,000
approximately 65% of all sales are collected in the month of the sale, 20% is collected in the following month, and 15% is collected in the month thereafter.
Determine :
1. Budgeted collections from customers in October total : Choose from the following:
a. 49,500
b. 31,500
c. 140,000
d. 39,000
2. Budgeted collections from customers in Nov total : Choose from the following :
a. 170,000
b. 68,500
c. 67,000
d. 58,000
Budgeted collections from customers in Dec total : Choose from the following :
a. 66,000
b. 61,500
c.180,000
d. 63,500

Answer 1

Answer: 1. $39000

2. $67000

3. $66000

Step-by-step explanation:

1. Budgeted collections from customers in October will be:

Current month sales = 30000 × 65% = 19500

Add: Collection from September = 60000 × 20% = 12000

Add: Collection from August = 50000 × 15% = $7500

Budgeted collections from customers in October total = $39000

2. Budgeted collections from customers in November total:

Current month sales = 80000 × 65% = 52000

Add: Collection from October = 30000 × 20% = 6000

Add: Collection from September = 60000 × 15% = $9000

Budgeted collections from customers in November total = $67000

3. Budgeted collections from customers in December total:

Current month sales = 70000 × 65% = $45500

Add: Collection from November = 80000 × 20% = $16000

Add: Collection from October = 30000 × 15% = $4500

Budgeted collections from customers in December total = $66000