Question

Eastern Corporation collects 45% in the second month following sale, 40% in the month following sale and 15% of a month's sales in the month of sale. Budgeted sales for the upcoming four months are: April budgeted sales $ 60,000. May budgeted sales. $180,000 June budgeted sales $250,000. July budgeted sales $220,000. The amount of cash that will be collected in July is budgeted to be.

Answer 1

• Requirement: Cash Collection in July.
• Working: Lets calculate 15%, 40% and 45% amount for each month.

	April	May	June	July
Budgeted Sales	$                60,000	$              180,000	$                 250,000	$        220,000
15% of above	$                   9,000 [collected in April]	$                27,000 [collected in May]	$                   37,500 [collected in June]	$          33,000 [collected in July]
40% of budgeted sale	$                24,000 [collected in May]	$                72,000 [collected in June]	$                 100,000 [collected in July]	$          88,000 [collected in August]
45% of budgeted sale	$                27,000 [collected in June]	$                81,000 [collected in July]	$                 112,500 [collected in August]	$          99,000 [collected in September]

• Answer, based on above

	July
Cash Collected from Sale of:
April	$                          -
May	$                81,000
June	$              100,000
July	$                33,000
Total Cash Collected in the month of July	$              214,000 = Answer

July total Cash Collection = $ 214,000