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Accounting: Cash budgeting.

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The Smith Company, a merchandising firm, has planned the following sales for the next four months:

January

February

March

April

Total budgeted sales............

$50,000

$70,000

$90,000

$60,000

Sales are made 40% for cash and 60% on account. From experience, the company has learned that a months sales on account are collected according to the following pattern:

Month of sale..........................................................

70%

First month following month of sale..........................

20%

Second month following month of sale.....................

8%

Uncollectible...........................................................

2%

Compute the budgeted cash receipts for April.

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Solution Summary

The problem deals with estimating the cash budget using provided information.

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  • B. Sc., University of Nigeria
  • M. Sc., London South Bank University
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