Fox Trail Center’s sales are all made on account. The firm’s collection experience has been that...

Fox Trail Center’s sales are all made on account. The firm’s collection experience has been that 32% of a month’s sales are collected in the month the sale is made, 51% are collected in the month following the sale, and 15% are collected in the second month following the sale. The sales forecast for the months of May through August is as follows:


May	$	231,000
June		283,000
July		311,000
August		356,000

Required:Calculate the cash collections that would be included in the cash budgets for July and August.

Expert Solution

Calculations	Particulars	May	June	July	August
A	Sales	231,000	283,000	311,000	356,000
B = A x 32%	Collection in month of sales (First month)	73,920	90,560	99,520	113,920
C = A of previous month x 51%	Collection in second month		117,810	144,330	158,610
D = A two months back x 15%	Collection in third month			34,650	42,450
E = B+C+D for July and August	Collection for July and August			278,500	314,980

ekkarill92 answered 3 years ago

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