Question

Bluebear Corporation budgeted sales for the last four months of 2018:

Month Sales September $360,000 October 400,000 November 350,000 December 410,000

Historically, the cash collection of sales have been as follows:

65 percent in month of sale 25 percent in month following sale 8 percent in second month following sale 2 percent uncollectible

The company allows a 2 percent cash discount for payments made by customers during the month of the sale. July and August sales were $405,000 and $275,000, respectively.

Required:

a. Prepare a schedule of budgeted cash collections from sales for September, October, and November. (5 points)

Answer 1

SCHEDULE OF BUDGETED CASH COLLECTIONS

	September	October	November	Total
July sales	$32,400 ($405,000*8%)			$32,400
August sales	$68,750 ($275,000*25%)	$22,000 ($275,000*8%)		$90,750
September sales	$234,000 ($360,000*65%)	$90,000 ($360,000*25%)	$28,800 ($360,000*8%)	$352,800
October sales		$260,000 ($400,000*65%)	$100,000 ($400,000*25%)	$360,000
November sales			$227,500 ($350,000*65%)	$227,500
Total cash collections	$335,150	$372,000	$356,300	$1,063,450