Question

ABC Company has budgeted sales for the next six months as follows:

             Budgeted Sales in Units
March             12,000 units                          
April             24,000 units
May               35,000 units
June              13,000 units
July              43,000 units
August            69,000 units

ABC Company sells its inventory to customers for $25 per unit.
30% of the company's sales are cash sales and the other 70% of
sales are made on account. The sales on account are collected
in the pattern:

35% collected in the month of sale
26% collected in the month following sale
19% collected in the second month following sale
12% collected in the third month following sale
8% collected four months after the month of sale

Calculate ABC Company's budgeted cash collections for July.

Answer 1

Budgeted cash collections for July= $828,600

Working

Cash sales of July	$ 322,500.00
Credit sales collection from sales related to
March (210000 x 8%)	$    16,800.00
April (420000 x 12%)	$    50,400.00
May (612500 x 19%)	$ 116,375.00
June (227500 x 28%)	$    59,150.00
July (752500 x 35%)	$ 263,375.00
Total collection	$ 828,600.00

.

	March	April	May	June	July
Units to be sold	12000	24000	35000	13000	43000
Multiplied by Sales price per unit	$            25.00	$              25.00	$            25.00	$            25.00	$                25.00
Total sales	$ 300,000.00	$    600,000.00	$ 875,000.00	$ 325,000.00	$ 1,075,000.00
Cash sales ( Total sales x 30%)	$    90,000.00	$    180,000.00	$ 262,500.00	$    97,500.00	$      322,500.00
Credit sales ( Total sales x 70%)	$ 210,000.00	$    420,000.00	$ 612,500.00	$ 227,500.00	$      752,500.00