Question

Benton Company's sales budget shows the following expected total sales:

Month Sales
January $ 23,000
February $ 27,000
March $ 32,000
April $ 43,000
The company expects 70% of its sales to be on account (credit sales). Credit sales are collected as follows: 25% in the month of sale, 69% in the month following the sale with the remainder being uncollectible and written off.
Required:
1. The total cash receipts during April would be _____________.

Answer 1

The total cash receipts during April would be $35,881

Step-by-step explanation:

Benton Company's sales budget in April is $43,000

Credit Sales = 70% x $43,000 = $30,100

Cash sales = $43,000 - $30,100 = $12,900

Benton Company's sales budget in March is $32,000

Credit Sales = 70% x $32,000 = $22,400

Cash sales = $32,000 - $22,400 = $9,600

Total cash receipts during April = Cash Sales in April + 25% x Credit Sales in April + 69% x Credit Sales in March = $12,900 + 25% x $30,100 + 69% x $22,400 = $35,881