Question

Cash Collections Budget - Company A reports the following sales and collection information: Nov. Dec. Jan....

Cash Collections Budget - Company A reports the following sales and collection information:

Nov. Dec. Jan. Feb. Mar. Apr.
Sales . . . $200,000 $325,000 $250,000 $240,000 $260,000 $270,000

(a) Assume Company A collects 20% of its sales in the month of the sale, 50% the next month, 25% the following month, and 5% is never collected. Compute the company's cash collections for each month from January through April. (Include formulas used to solve problem).

Cash Collection Budget - Company B reports the following sales and collection information:

Nov. Dec. Jan. Feb. Mar. Apr.
Sales . . . $440,000 $500,000 $450,000 $480,000 $500,000 $430,000

(b) Assume Company B collects 35% of its sales in the month of the sale, 40% the next month, 15% the following month, and 10% is never collected. Compute the company's cash collections for each month from January through April. (Include formulas used to solve problem).

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Answer #1
particulars jan feb march april
sales for the month 250000 240000 260000 270000
A)collection in same month@20% 50000 48000 52000 54000
B)collection in next month@50% 175000 125000 120000 130000
C)collection in the follwing month@25% 50000 81250 62500 60000
total(A+B+C) for month 275000 254250 234500 244000

B) company B

particulars jan feb march april
sales of the month 450000 480000 500000 430000
A)collection in same month @ 35% 157500 168000 175000 150500
B)collection in the next month@ 40% 200000 180000 192000 200000
C)Collection in following month@15% 66000 75000 67500 72000
Total collection(A+B+C)for the month 423500 423000 434500 422500
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