Question

Circle A Company (XXX) is preparing its cash collections budget for the 2nd quarter of 2012.   Budgeted sales are as follows:

Budgeted sales	Apr	May	Jun
Cash sales	$10,000	$9,000	$7,500
Credit sales	24,000	20,000	16,500
Total sales	$34,000	$29,000	$24,000

Accounts receivable at March 31 were $14,000. The budget assumes that 20% of credit sales are collected in the month of sale, and the remaining 80% are collected one month later. Please prepare the cash collections budget.

For the budgeted balance sheet at June 30, what amount should be shown for Accounts receivable?

Answer 1

Cash collection budget
	Apr	May	Jun	Total
Cash Sales	$10,000	$9,000	$7,500	$26,500
Collections from credit sales:				$0
From March credit Sales	$14,000			$14,000
From Apr credit Sales [24000*20%; 24000*80%]	$4,800	$19,200		$24,000
From May credit sales [20,000*20%; 20,000*80%]		$4,000	$16,000	$20,000
From Jun credit sales [16,500*20%]			$3,300	$3,300
Total collections	$28,800	$32,200	$26,800	$87,800

Accounts receivable For the budgeted balance sheet at June 30 = $16,500 *80% = $13,200