Cash Receipts The sales budget for Perrier Inc. is forecasted
Cash Receipts
The sales budget for Perrier Inc. is forecasted as follows:
| Month | Sales Revenue |
|---|---|
| May | $ 120,000 |
| June | 160,000 |
| July | 180,000 |
| August | 120,000 |
To prepare a cash budget, the company must determine the budgeted cash collections from sales. Historically, the following trend has been established regarding cash collection of sales:
50 percent in the month of sale.
25 percent in the month following sale.
20 percent in the second month following sale.
5 percent uncollectible.
The company gives a 2 percent cash discount for payments made by customers during the month of sale. The accounts receivable balance on April 30 is $24,000, of which $7,000 represents uncollected March sales and $17,000 represents uncollected April sales.
Prepare a schedule of budgeted cash collections from sales for May, June, and July. Include a three-month summary of estimated cash collections.
| Perrier, Inc. Schedule of Budgeted Cash Collections Quarterly by Months | ||||
|---|---|---|---|---|
| May | June | July | Total | |
| Total Cash receipts: | $Answer | $Answer | $Answer | $Answer |
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Solution: Cash Receipts The sales budget for Perrier Inc. is forecasted