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

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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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