Question

Lawson and Company has estimated the following forecasted sales for the next 3-month period: Month and...

Lawson and Company has estimated the following forecasted sales for the next 3-month period:

Month and Estimated sales

June- 41,000

July- 27,000

August- 35,000

On average, 55% of sales are collected in the month of sale, 44% in the following month, and the remaining 1% is never collected. Determine the budgeted cash receipts for July?

Options:

$32,890

$31,110

$29,000

$29,100

Business   Accounting   
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Homework Answers

Answer #1

Computation of total cash receipt for July is:

Total cash receipt for July = Cash receipt in July of June month + Cash receipt in July of July month

= $18,040 + $14,850

= $32,890

Hence, the total cash receipt for July is $32,890, that is, the first option is correct.

Working Notes:

Step – 1:

Computation of cash receipt in July of June month is:

Cash receipt in July of June month = Value of sales for June * Percentage of following month

= $41,000 * 0.44

= $18,040

Hence, the cash receipt in July of June month is $18,040.

Step – 2:

Computation of cash receipt for July of July month is:

Cash receipt in July of July month = Value of sales for July * Percentage of same month

= $27,000 * 0.55

= $14,850

Hence, the cash receipt in July of June month is $14,850.

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