Question

Casa Development, Inc. has budgeted sales revenues as follows: Budgeted Sales Revenues January $55,000 February 75,000 March 90,000 April 80,000 May 60,000 June 35,000 Past experience has indicated that 80% of sales each month are on credit and that collection of credit sales occurs as follows: 60% in the month of sale, 30% in the month following the sale, and 5% in the second month following the sale. The other 5% is uncollectible. Prepare a schedule which shows expected cash receipts from sales for the months of April, May, and June.

Answer 1

Expected cash receipts from sales for the months of April, May, and June are 63,000 ,51,600 and 34,400

Step-by-step explanation:

As you can see we apply the percentages of collection of 60%, 30% and 5% to each month credit sales to get the total estimated cash collections.

Casa Development, Inc.

Budgeted Cash Schedule

January February March April May June

Revenues $55,000 75,000 90,000 80,000 60,000 35,000

Credit Sales 80%

Credit Sales 44000 60,000 72,000 64,000 48,000 28,000

Collections 60% 30% 5%

January

44000 26,400 13,200 2,200

Feb 60% 30% 5%

60,000 36000 18000 3000

Mar 60% 30% 5%

72,000 43,200 21,600 3600

Apr 60% 30% 5%

64000 38400 19200 3,200

May 60% 30%

48,000 28,800 14,400

June 60%

28,000 16,800

Total Cash Collections 63,000 51,600 34,400