Cash Receipts
The sales budget for Perrier Inc. is forecasted as follows:
Month
Sales Revenue
May $100,000
June 170,000
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:
- 60 percent in the month of sale.
- 20 percent in the month following sale.
- 15 percent in the second month following sale.
- 5 percent uncollectible.
The company gives a 1 percent cash discount for payments made by customers during the month of sale. The accounts receivable balance on April 30 is $27,000, of which $6,000 represents uncollected March sales and $21,000 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: