Question

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, what are the expected cash receipts for March? Enter your answer rounded to two decimal places. Do not enter $ or comma in the answer box. For example, if your answer is $12,300.456 then enter as 12300.46 in the answer box.

Answer #1

Given about Big City Manufacturing,

Expected sales are as follow:

January = $450000

February = $375000

March = $555000

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.

So, in the month of march, Cash receipt = 20% of March's sales + 45% of February's sales + 35% of January's sales

=> Expected cash receipt in march = 0.2*555000 + 0.45*375000 + 0.35*450000 = $437250

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sales paid in the month after the sale, and another 35% are credit
sales paid 2 months after the sale, what are the expected cash
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