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Northern Company has budgeted sales for the upcoming months as follows: April     450,000 May     465,000 June    ...

Northern Company has budgeted sales for the upcoming months as follows:

April     450,000

May     465,000

June     490,000

July       515,000

August    500,000

Septemeber    475,000

18% percent of the sales are credit sales and the remainder are cash sales. Credit sales are collected 45% in the month of sale, 36% in the month following the sale, and 19% in the second month following the sale.

Required: Prepare a schedule of cash collections for June, July, & August

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Answer #1

Prepare a schedule of cash collections for June, July, & August

June July August
Cash Sales 490000*82% = 401800 515000*82% = 422300 500000*82% = 410000
Collection from credit sales
April Sales 450000*18%*19% = 15390
May sales 465000*18%*36% = 30132 465000*18%*19% = 15903
June Sales 490000*18%*45% = 39690 490000*18%*36% = 31752 490000*18%*19% = 16758
July Sales 515000*18%*45% = 41715 515000*18%*36% = 33372
August sales 500000*18%*45% = 40500
Total cash collection 487012 511670 500630
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