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    Calculating amount of projected cash collections

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    Statues Inc. has the following sales budget for the second of the current year:

    April May June Total Budgeted sales $250,000 $340,000 $590,000 $1,180,000 From past experience the company has learned that 10% of a month's sales are collected in the month of sale, another 60% are collected in the month following sale, and the remaining 30% are collected in the second month following sale. Bad debts are negligible and can be ignored. February sales totaled $150,000 and March Sales totaled $220,000.

    For each of the following months, calculate the amount of projected cash collections: Show solutions and related details.

    A. April
    B. May
    C. June.

    See the attached file.

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    Solution Preview

    Your solution is attached.

    .10 month of sale
    .60 2nd month
    .30 third month

    .30 for third month 150000 x .30 April: 45,000

    .60 for 2nd month 220,000 x .60 ...

    Solution Summary

    This solution calculates the amount of projected cash collections for Statues Inc.