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