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31 August, 15:36

Blue has forecast sales to be $429,000 in February, $559,000 in March, $599,000 in April, and $639,000 in May. The average cost of goods sold is 60% of sales. All sales are made on credit and sales are collected 50% in the month of sale, 30% the month following and the remainder two months after the sale. What are budgeted cash receipts in May

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  1. 31 August, 16:33
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    Total budgeted cash receipts fro May : $611000

    Explanation:

    Sales on credit is where the debtor can pay for the goods or services on a later date. In this case, it is paid at 3 different times: 50% during the month of sale, 30% during the next month and the reminder 20% the month after that.

    According to the information, May collections would include sales of May as well as March and April. It would be:

    50% of May sales = $639000 x 50% = $319500

    30% of April sales = $599000 x 30% =

    $179700

    20% of March sales = $559000 x 20% = $111800

    Total budgeted cash receipts for May = $319,500 + $179,700 + $111800 = $611000
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