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    Building a Cash Budget

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    Orion Corporation is preparing a cash budget for the six months beginning January 1. Shown below are the company's expected collection pattern and the budgeted sales for the period.

    Expected collection pattern:
    65% collected in the month of sale
    20% collected in the month after sale
    10% collected in the second month after sale
    4% collected in the third month after sale
    1% uncollectible

    Budgeted sales:
    January $160,000
    February 185,000
    March 190,000
    April 170,000
    May 200,000
    June 180,000

    The estimated total cash collections during April from sales and accounts receivables would be:

    A) $155,900.
    B) $167,000.
    C) $171,666.
    D) $173,400.

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    https://brainmass.com/business/cash-budgeting/building-a-cash-budget-366434

    Solution Preview

    Before starting the computations, determine the months involved in each category:

    Expected collection pattern:
    65% collected in the month of sale (April)
    20% collected in the ...

    Solution Summary

    This solution discusses and illustrates how to build a cash budget for a single month if the cash collection and budgeted sales patterns are known for several months before it.

    $2.19

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