Cj\'s distribution was preparing a sales budget for the first quarter of 2016. F
ID: 2427683 • Letter: C
Question
Cj's distribution was preparing a sales budget for the first quarter of 2016. Forecast sales are as follows. January: $203,000, February: $227,000, March: $248,000. Sales are 40% cash and 60% on credit. Fifty-five percent of the credit accounts are collected in the month of sale, 35% in the month following the sale, and 10% in the following month. No uncollectible accounts are anticipated. Accounts receivable at the beginning of 2016 are $82,950 (10% of November credit sales of $150,000 and 35% of December credit sales of $151,000). Prepare a schedule showing sales and cash collections for January, February, and March, 2016.Explanation / Answer
Statement Showing Cash Collection
Jan. Feb. March Expected Sales $203,000.00 $227,000.00 $248,000.00 Cash Sales @ 40% $81,200.00 $90,800.00 $99,200.00 Credit Sales 60% $121,800.00 $136,200.00 $148,800.00 55% collected in month of sale $66,990.00 $74,910.00 $81,840.00