In: Finance
1.Big City Manufacturing (BCM) is preparing its cash budget and expects to have sales of $450,000 in January, $375,000 in February, and $555,000 in March. If 20% of the sales are for cash, 45% are credit sales paid in the month after the sale, and another 35% are credit sales paid 2 months after the sale, what are the expected cash receipts for March?
2.In problem 1, Big City Manufacturing (BCM) assumed that all credit sales were paid in full, which is not realistic. BCM studied its past credit sales and determined that 3.25% of its credit sales resulted in Bad Debts that were never collected. Using the data from the previous problem with the new assumption that 3.25% of credit sales were never collected, what is your revised estimate for the expected cash receipts for March?