Cash Receipts - The sales budget for Andrew Inc. is forecasted as follows:
Month Sales Revenue May$ 170,000 June 210,000 July 230,000 August 170,000
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 $34,000, of which $10,000 represents uncollected March sales and $24,000 represents uncollected April sales.
Create a schedule of budgeted cash collections from sales for May, June, and July. Include a three-month summary of estimated cash collections.