In: Accounting
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
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 |