Question

Daybook Inc. collects 30% of its sales on account in the month of the sale and 70% in the month following the sale. If sales on account are budgeted to be $105,000 for September and $116,000 for October, what are the budgeted cash receipts from sales on account for October?

Answer 1

Cash Budget : A cash budget is one that is created to predict how much money will come in and go out over a specific time period. It is used to determine whether the firm has the necessary cash on hand to conduct business. It consists of cash payments, cash revenues, and short-term borrowing. It does not include non-cash transactions like depreciation costs, bond conversions to other asset classes, and exchanges of non-cash assets for only non-cash assets.

Calculation of budgeted cash receipts 

Particulars	Amount$
Collections from september sales (70 % x $105,000)	73,500
Collections from october sales (30% x $116,000)	34,800
Total receipts from sales on account	108,300

 

Therefore, the budgeted cash receipts from sales on account for october are  $108,300