Question

# The sales budget for your company in the coming year is based on a quarterly growth...

The sales budget for your company in the coming year is based on a quarterly growth rate of 20 percent with the first-quarter sales projection at \$226.3 million. In addition to this basic trend, the seasonal adjustments for the four quarters are 0, −\$17.3, −\$9.3, and \$22.3 million, respectively. Generally, 50 percent of the sales can be collected within the quarter and 45 percent in the following quarter; the rest of the sales are bad debt. The bad debts are written off in the second quarter after the sales are made. The beginning accounts receivable balance is \$105.3 million. Assuming all sales are on credit, compute the cash collections from sales for each quarter.

 QTR 1 QTR 2 QTR 3 QTR 4 Sales 226.30 271.56 325.87 391.05 Seasonal adjustments 0.00 -17.30 -9.30 22.30 Sales after seasonal adjustment 226.30 254.26 316.57 413.35 CASH COLLECTIONS: From the sales of the quarter (50%) 113.15 127.13 158.29 206.67 From the sales of the previous quarter (45%) 94.77 101.84 114.42 142.46 [105.3*0.45/0.50) [226.30*45%] [254.26*45%] [316.57*45%] Cash collections from sales for each month 207.92 228.97 272.70 349.13