Question

XYZ Company sells a product for $10. Budgeted sales for the first quarter of the current year are as follows:

Budgeted Sales

January    $160,000

February   $100,000

March   $180,000

The company collects 70 percent in the month of sale and 25 percent in the following month. Five percent of all sales are uncollectible and written off.

What would be XYZ Company’s budgeted cash receipts for March?

Answer 1

			January	February	March
		Budgeted Sales	$160,000	$100,000	$180,000
	A	Collection from January sales	$112,000	$40,000	$0	(January collection =0.7*160000, February collection=0.25*160000)
	B	Collection from February sales	$0	$70,000	$25,000	(Februarycollection =0.7*100000, Marchcollection=0.25*100000)
	C	Collection from March sales	$0	$0	$126,000	(March collection =0.7*180000,)
	D=A+B+C	Total Collection	$112,000	$110,000	$151,000
		XYZ Company’s budgeted cash receipts for March			$151,000		$151,000