Q15SE - Horngren'S Financial And Managerial Accounting

Question

Preparing a financial budget—schedule of cash receipts

 Victors expects total sales of \(702,000 for January and \)349,000 for February. Assume that Victor's sales are collected as follows:

50% in the month of the sale 

30% in the month after the sale 

16% two months after the sale

4% never collected 

November sales totaled \(388,000, and December sales were \)407,000. Prepare a schedule of cash receipts from customers for January and February. Round answers to the nearest dollar.

Step-by-Step Solution

Answer

Answer

Total cash receipts from the customers is $535,180 in the month of January and $450,220 in the month of February.

Step 1: Meaning of schedule of cash receipts

The structure and table formed for measuring the cash balances in the form of gained.

Step 2: Preparation of schedule of cash receipts

Particulars	January	February
Total budgeted sales	$702,000	$349,000
Cash receipts from customers:
50 % in the month of sale	$351,000	$174,500
30% in the month after sale	$407,000*30% =$122,100	$702,000*30% =$210,600
16% two months after sales	$388,000*16% =$62,080	$407,000*16% =$65,120
Total cash receipts from customers	$535,180	$450,220