Question

Big City Manufacturing (BCM) assumed that all credit sales were paid in full, which is not realistic. BCM studied its past credit sales and determined that 3.25% of its credit sales resulted in Bad Debts that were never collected. Using the data from the previous problem with the new assumption that 3.25% of credit sales were never collected, what is your revised estimate for the expected cash receipts for March? Data from previous problem: Big City Manufacturing (BCM) is preparing its cash budget and expects to have sales of $450,000 in January, $375,000 in February, and $555,000 in March. If 20% of the sales are for cash, 45% are credit sales paid in the month after the sale, and another 35% are credit sales paid 2 months after the sale

Answer 1