Question

HolidayHoliday

Corporation has found that

6060 %

of its sales in any given month are credit sales, while the remainder are cash sales. Of the credit sales,

HolidayHoliday

Corporation has experienced the following collection pattern:

	25% received in the month of the sale
	50% received in the month after the sale
	16% received two months after the sale
	9% of the credit sales are never received

November sales for last year were

$ 90 comma 000$90,000 ,

while December sales were

$ 115 comma 000$115,000.

Projected sales for the next three months are as follows:

January sales. . . . . . . . . . . . . . . .	$145,000
February sales. . . . . . . . . . . . . . .	$125,000
March sales. . . . . . . . . . . . . . . . .	$180,000

Requirement

Prepare a cash collections budget for the first quarter, with a column for each month and for the quarter. (Round your answers to the nearest whole dollar.)

Holiday Corporation

Cash Collections Budget

For the Months of January through March

	January
Cash sales
Collections on credit sales:
25% Month of sale
50% Month after
16% Two months after
Total cash collections

Answer 1

Solution:

Holiday Corporation
Cash Collections Budget
For the Months of January through March
Particulars	January	February	March	Quarter
Cash sales	$58,000.00	$50,000.00	$72,000.00	$180,000.00
Collections on credit sales:
25% Month of sale	$21,750.00	$18,750.00	$27,000.00	$67,500.00
50% Month after	$34,500.00	$43,500.00	$37,500.00	$115,500.00
16% Two months after	$8,640.00	$11,040.00	$13,920.00	$33,600.00
Total cash collections	$122,890.00	$123,290.00	$150,420.00	$396,600.00