The following sales budget information is known for East Company, which sells wall hangings for $20 per unit:

Also known:
● 30% of the sales are cash sales.
● Credit sales are collected as follows: 60% in the same month and the rest in the following month.

a. Prepare a schedule of cash collections for September, October, and November.

b. Prepare a schedule of cash collections for September, October, and November assuming the following: 20% cash and 80% credit sales; collection of credit sales: 75% in the same month and 20% in the following month. Assume that 5% of sales are simply never collected.

c. Compare your answers in parts (a) and (b). Prompt collections and cash sales maximize cash flows. Managers can compare collections to terms of their credit sales and industry metrics and pay structures for salespeople. What are some actions that managers can take to “speed up” collections? Be specific.

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July $20,000 August $28,000 September $40,000 October $50,000 November $30,000 December $60,000