Question
In: Accounting
LaChut Corporation has found that 80% of its sales in any given month are credit sales,...
LaChut Corporation has found that 80% of its sales in any given month are credit sales, while the remainder are cash sales. Of the credit sales, LaChut Corporation has experienced the following collection pattern:
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20% received in the month of the sale |
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40% received in the month after the sale |
|
|
24% received two months after the sale |
|
|
16% of the credit sales are never received |
November sales for last year were $80,000, while December sales were $110,000. Projected sales for the next three months are as follows:
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January sales. . . . . . . . . . . . . . . . . . . . . . . . . . . |
$165,000 |
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February sales. . . . . . . . . . . . . . . . . . . . . . . . . . . |
$120,000 |
|
March sales. . . . . . . . . . . . . . . . . . . . . . . . . . . |
$180,000 |
Requirement
Prepare a cash collections budget for the first quarter, with a column for each month and for the quarter. (Round your answers to the nearest whole dollar.)
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LaChut Corporation |
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Cash Collections Budget |
||
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For the Months of January through March |
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January/February/March/Quarter |
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Cash sales |
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Collections on credit sales: |
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20% Month of sale |
|
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40% Month after |
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24% Two months after |
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Total cash collections |
Solutions
Expert Solution
Solution
| LaChut Corporation | |||||
| Cash Collections Budget | |||||
| For the Months of January through March | |||||
| January | February | March | Quarter | ||
| Cash sales | $ 33,000.00 | $ 24,000.00 | $ 36,000.00 | 93,000.00 | |
| Collections on credit sales: | |||||
| 25% Month of sale | $ 26,400.00 | $ 19,200.00 | $ 28,800.00 | 74,400.00 | |
| 50% Month after | $ 44,000.00 | $ 66,000.00 | $ 48,000.00 | 158,000.00 | |
| 24% Two months after | $ 15,360.00 | $ 21,120.00 | $ 31,680.00 | 68,160.00 | |
| Total cash collections | $ 118,760.00 | $ 130,320.00 | $ 144,480.00 | 393,560.00 | |
Working
| November | December | January | February | March | |
| Total sales | $ 80,000.00 | $ 110,000.00 | $ 165,000.00 | $ 120,000.00 | $ 180,000.00 |
| Cash sales | $ 16,000.00 | $ 22,000.00 | $ 33,000.00 | $ 24,000.00 | $ 36,000.00 |
| Credit sales | $ 64,000.00 | $ 88,000.00 | $ 132,000.00 | $ 96,000.00 | $ 144,000.00 |
ekkarill92 answered 1 year agoRelated Solutions
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