Mississippi Retailers expects credit sales in the next quarter as follows: Prior
ID: 2463909 • Letter: M
Question
Mississippi Retailers expects credit sales in the next quarter as follows:
Prior experience has shown that 63 percent of a month’s sales are collected in the month of sale, 21 percent are collected in the month following sale, and the remaining 16 percent are collected in the second month following sale. February and March sales were $95,000 and $107,000, respectively.
Estimate budgeted cash receipts for April,May, and June.
Collection of credit sales
April
May
June
Collection of February sales
Collection of March sales
Collection of April sales
Collection of May sales
Collection of June sales
April $63,600 May 86,200 June 105,000Explanation / Answer
Feb Mar April May June Sales 95000 107000 63600 86200 105000 Cash Collection 61% in the month of sale 38,796 52,582 64,050 21% in the next month 22,470 13,356 18,102 16% in the second month 15,200 17,120 10,176 Total cash receipts 76,466 83,058 92,328 In April, the collection is 61% of April, 21% of March and 16% of Feb. In May it is 61% of May, 21% of April and 16% of March and so on.