Question

Ridgewood Retailers expects credit sales in the next quarter as follows:

April		$63,300
May		96,200
June		113,000

Prior experience has shown that 61 percent of a month’s sales are collected in the month of sale, 18 percent are collected in the month following sale, and the remaining 21 percent are collected in the second month following sale. February and March sales were $82,200 and $107,000, respectively.

Estimate budgeted cash receipts for April, May, and June.

Collection of credit sales	April		May		June
Collection of February sales	$		$		$
Collection of March sales
Collection of April sales
Collection of May sales
Collection of June sales
	$		$		$

Answer 1

Collection of credit sales	April	May	June
Collection of February sales	82,200 x 21% = 17,262	0	$
Collection of March sales	107,000 x 18% = 19,260	107,000 x 21% =22,470
Collection of April sales	63,300 x 61%=38,613	63,300 x 18%= 11,394	63,300 x 21%= 13,293
Collection of May sales	0	96,200 x 61% = 58,682	96,200 x 18% = 17,316
Collection of June sales	0	0	113,000 x 61%= 68,930
Total cash collection	$75,135	$92,546	$99,539