ABC Company has sales on account and for cash. Specifically, 57% of its sales are on account and 43% are for cash. Credit sales are collected in full in the month following the sale. The company forecasts sales of $516,000 for April, $526,000 for May, and $551,000 for June. The beginning balance of Accounts Receivable is $297,700 on April 1. Prepare a schedule of budgeted cash receipts for April, May, and June.

Question

Business

Chester

27 April, 00:31

ABC Company has sales on account and for cash. Specifically, 57% of its sales are on account and 43% are for cash. Credit sales are collected in full in the month following the sale. The company forecasts sales of $516,000 for April, $526,000 for May, and $551,000 for June. The beginning balance of Accounts Receivable is $297,700 on April 1. Prepare a schedule of budgeted cash receipts for April, May, and June.

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Harry Franklin · Answer 1

In April:

Total sales = $516,000

cash sales = 43% * $516,000

= $221,880

sales on account = 57% * $516,000

= $294,120

In May:

Total sales = $526,000

cash sales = 43% * $526,000

= $226,180

sales on account = 57% * $526,000

= $299,820

In June:

Total sales = $551,000

cash sales = 43% * $551,000

= $236,930

sales on account = 57% * $551,000

= $314,070

Therefore,

Budget cash receipts in April = cash sales + collection on accounts receivable (beginning balance of a/c receivable on April 1)

= $221,880 + $297,700

= $519,580

Budget cash receipts in May = cash sales + collection on accounts receivable of April

= $226,180 + $294,120

= $520,300

Budget cash receipts in June = cash sales + collection on accounts receivable of May

= $236,930 + $299,820

= $536,750