9SE

Question

Preparing a financial budget—schedule of cash receipts

Berry expects total sales of $359,000 in January and $405,000 in February. Assume that Berry’s sales are collected as follows:

80% in the month of the sale

10% in the month after the sale

6% two months after the sales

4% never collected

November sales totaled $350,000, and December sales were $325,000. Prepare a schedule of cash receipts from customers for January and February. Round answers to the nearest dollar.

Step-by-Step Solution

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Answer

The total cash receipts from customers are $340,700 and $379,400 for January and February respectively.

1Step 1: Meaning of reciepts

The receipts are the amount that will be received by the company for the services or goods provided.

2Step 2: Schedule of cash receipts from customers

Particulars	January	February
Total sales expected	$359,000	$405,000
Cash receipts from customers
Cash received in the month of sales (10%)	$287,200	$324,000
Cash received in the month after sales (10%)	$32,500	$35,900
Cash received two months after sales (6%)	$21,000	$19,500
Total cash receipts from customers	$340,700	$379,400

8SE

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