Question

Flanders Industries collects 35% of its sales on account in the month of the sale and 65% in the month following the sale. If sales on account are budgeted to be $175,000 for May and $225,000 for June, what are the budgeted cash receipts from sales on account for June?

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Answer 1

Answer)

Calculation of total cash collections in the month of June

Particulars	Amount (In $)
Collections in June for sales on account of May ($ 175,000 X65%)	113,750
Collections in June for sales on account of June ($ 225,000 X65%)	78,750
Total cash receipts in the month of June	192,500

Therefore total cash collections in the month of June is $ 192,500.

Note:

· 35% of the sales on account of May will be collected in the May itself and balance 65% will be collected in the month of June.

· 35% of the sales on account of June will be collected in the June itself and balance 65% will be collected in the month of July.