RemoteCenter\'s sales are all made on account. The firm\'s collection experience
ID: 2756402 • Letter: R
Question
RemoteCenter's sales are all made on account. The firm's collection experience has been that 20 percent of a month's sales are collected in the month of sale, 60 percent are collected in the month following the sale, and 18 percent are collected in the second month following the sale. The sales forecast for the months of August through November is:
August
$480,000
September
$560,000
October
$600,000
November
$700,000
Calculate the cash collections that would be included in the cash budgets for October and November.
August
$480,000
September
$560,000
October
$600,000
November
$700,000
Explanation / Answer
August 4,80,000 Collection September 5,60,000 1st Month 20% October 6,00,000 2nd month 60% November 7,00,000 3rd Month 18% August September October November Credit sales 4,80,000 5,60,000 6,00,000 7,00,000 20% Collected in month of sales 120000 140000 20% of current month 60% Collected in month after sales 3,36,000 3,60,000 60 percent of previous month 18% collected in second month following sales 86400 100800 18% of 2 month before value Total cash receipts 5,42,400.00 6,00,800.00 Sum of all 3 receivables