Question
In: Accounting
Grover has forecast sales to be $128,000 in February, $137,000 in March, $151,000 in April, and...
Grover has forecast sales to be $128,000 in February, $137,000 in March, $151,000 in April, and $148,000 in May. The average cost of goods sold is 70% of sales. All sales are on made on credit and sales are collected 60% in the month of sale, and 40% the month following. What are budgeted cash receipts in March?
-
$133,400
-
$96,900
-
$137,400
-
$94,100
Solutions
Expert Solution
Answer: $133,400
.
.
| Calculation of budgeted cash receipts in March | ||
| Collections from sales made in February: | ||
| Sales made in February (a) | $128,000 | |
| Percentage of February sales to be collected in March [Month following the month of sale] (b) | 40% | |
| Collections in March from sales made in February: (c = a x b) | $51,200 | |
| Collections from sales made in March: | ||
| Sales made in March (d) | $137,000 | |
| Percentage of March sales to be collected in March [Month of sale] (e) | 60% | $82,200 |
| Collections in March from sales made in March: (f = d x e) | ||
| Budgeted Total cash receipts in January (c + f) | $133,400 |
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