Question

# Crew Clothing (CC) sells women’s resort casual clothing to high-end department stores and in its own...

Crew Clothing (CC) sells women’s resort casual clothing to high-end department stores and in its own retail boutiques. CC expects sales for January, February, and March to be \$370,000, \$430,000, and \$450,000, respectively. Twenty percent of CC’s sales are cash, with the remainder collected evenly over two months. During December, CC’s total sales were \$680,000. CC is beginning its budget process and has asked for your help in preparing the cash budget.

Compute CC’s expected cash receipts from customers for each month.

 December January February March Total sales (i) 680,000 370,000 430,000 450,000 Cash sales (ii) 680,000 x 20% = 136,000 370,000 x 20% = 74,000 430,000 x 20% = 86,000 450,000 x 20% = 90,000 Credit sales (i - ii) \$544,000 \$296,000 \$344,000 \$360,000

Schedule of expected cash collection

 January February March Cash sales 74,000 86,000 90,000 From Dec credit sales 544,000 x 50% = 272,000 544,000 x 50% = 272,000 0 From jan credit sales 0 296,000 x 50% = 148,000 296,000 x 50% = 148,000 From Feb credit sales 0 0 344,000 x 50% = 172,000 Total cash receipt \$346,000 \$506,000 \$410,000

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