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7 July, 12:43

Monette Corporation has found that 70% of its sales in any given month are credit sales, while the remainder are cash sales. Of the credit sales, Monette Corporation has experienced the following collection pattern. November sales for last year were $105,000, while December sales were $120,000 Projected sales for the next three months are as follows 20% received in the month of the sale 40% received in the month after the sale 24% received two months after the sale 16% of the credit sales are never received January sales February sales March sales $ 145,000 $ 125,000 S 195,000 Requirement Prepare a cash collections budget for the first quarter, with a column for each month and for the quarter. (Round your answers to the nearest whole dollar.) For the Months of January through March January Cash sales Collections on credit sales 20% Month of sale 40% Month after 24% Two months after Total cash collections

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  1. 7 July, 15:02
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    Answer and Explanation:

    The preparation of cash collection budget is shown below:-

    Cash Collection Budget

    For the month of January through March

    January February March Quarter

    Cash sales $43,500 $37,500 $58,500 $139,500

    Collection on Credit sales

    20% month of sale $20,300 $17,500 $27,300 $65,100

    40% month after $33,600 $40,600 $35,000 $109,200

    24% two months after $17,640 $20,160 $24,360 $62,160

    Total Cash collection $115,040 $115,760 $145,160 $375,960

    Working Note 1

    November December January February March

    Total Sales $105,000 $120,000 $145,000 $125,000 $195,000

    Cash sales $31,500 $36,000 $43,500 $37,500 $58,500

    Credit sales $73,500 $84,000 $101,500 $87,500 $136,500

    Credit sales is 70% of Total sales every month

    Cash Sales is 30% of Total sales every month

    Working Note 2

    January February March Quarter

    Cash sales $43,500 $37,500 $58,500 $139,500

    Cash collection from credit sales of

    November $17,640 $17,640

    December $33,600 $20,160 $53,760

    January $20,300 $40,600 $24,360 $85,260

    February $17,500 $35,000 $52,500

    March $27,300 $27,300

    Total collections $115,040 $115,760 $145,160 $375,960
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