Question

The BRS Corporation makes collections on sales according to the following schedule:

25% in month of sale

71% in month following sale

4% in second month following sale

The following sales have been budgeted:

	Sales
April	$	180,000
May	$	110,000
June	$	100,000

Budgeted cash collections in June would be:

Garrison 16e Rechecks 2017-09-30

Answer 1

Solution:
	Budgeted cash collections in June	$110,300
Working Notes:
	Budgeted cash collections in June	=4% of April sales + 71% of May sales + 25% of June sales
		=4% x $180,000 + 71% x $110,000 + 25% x $100,000
		=$7,200 + $78,100 + $25,000
		=$110,300
Alternatively:
		April	May	June	July	August
	Budgeted Sales	$180,000	$110,000	$100,000
Cash collections
April sales collected
	25% in the month of sales (April)	$45,000
	[$180,000 x 25%]
	71% in the month following sale (May)		$127,800
	[$180,000 x 71%]
	4% in second month following sale (June)			$7,200
	[$180,000 x 4%]
May sales collected
	25% in the month of sales (May)		$27,500
	[$110,000 x 25%]
	71% in the month following sale (June)			$78,100
	[$110,000 x 71%]
	4% in second month following sale (July)				$4,400
	[$110,000 x 4%]
June sales collected
	25% in the month of sales (June)			$25,000
	[$100,000 x 25%]
	71% in the month following sale (July)				$71,000
	[$100,000 x 71%]
	4% in second month following sale (August)					$4,000
	[$100,000 x 4%]
Cash collections		$45,000	$155,300	$110,300	$75,400	$4,000
Please feel free to ask if anything about above solution in comment section of the question.