The sales budget for Perrier Inc is forecasted as follows Mo

The sales budget for Perrier Inc. is forecasted as follows: Month Sales Revenue May $ 120,000 June 160,000 July 180,000 August 120,000 To prepare a cash budget, the company must determine the budgeted cash collections from sales. Historically, the following trend has been established regarding cash collection of sales: 50 percent in the month of sale. 25 percent in the month following sale. 20 percent in the second month following sale. 5 percent uncollectible. The company gives a 2 percent cash discount for payments made by customers during the month of sale. The accounts receivable balance on April 30 is $24,000, of which $7,000 represents uncollected March sales and $17,000 represents uncollected April sales. Prepare a schedule of budgeted cash collections from sales for May, June, and July. Include a three-month summary of estimated cash collections. Perrier, Inc. Schedule of Budgeted Cash Collections Quarterly by Months May June July Total Total Cash receipts: $Answer 72,378 Incorrect $Answer 113,022 Incorrect $Answer 150,400 Incorrect $Answer 344,900 Incorrect Check

Solution

Particulars Apr May June July Aug Sep Oct Nov Sales 120000 160000 180000 120000 Collections March 2800 0 Apr 8500 6800 3400 May 60000 30000 24000 June 80000 40000 32000 July 90000 45000 36000 Aug 60000 30000 24000 Collection 71300 116800 157400 Three months collection = 71300+116800+157400 = $345500