Question

The total budgeted sales of Nana Kay Ltd for October, the first month of the last quarter in 2019 were GHS1,900,000. Sales are expected to increase by GHS100,000 in each month. Cash sales for each month are GHS200,000 and the remaining are credit sales. All the products are sold at a mark up of the cost plus 25 per cent. On average, Nana Kay Ltd collects 60 per cent of the credit sales in the month of sale and 35 per cent in the month following sales. The remainder is uncollectible. Determine the budgeted total cash receipt for each month of the last quarter of 2019 and the expected account receivables at the end of the quarter. (Show all workings clearly)

Answer 1

	October	November	December
Total Sales	1,900,000	2,000,000	2,100,000
Cash sales	200,000	200,000	200,000
Credit sales:	1,700,000	1,800,000	1,900,000
Collections from credit sales (60:35)
October sales	1,020,000	595,000
November sales		1,080,000	630,000
December sales			1,140,000
Expected cash receipts	1,220,000	1,875,000	1,970,000
Accounts receivables at the end of the quarter From December month sales 1,900,000*35%=			665,000

answered by: anonymous