The LaPann Company has obtained the following sales forecast data: July August September October Cash sales $80,000
Question:
The LaPann Company has obtained the following sales forecast data:
July August September October
| Cash sales | $80,000 | $70,000 | $50,000 | $60,000 |
| Credit sales | 240,000 | 220,000 | 180,000 | 200,000 |
The regular pattern of a collection of credit sales is 20% in the month of sale, 70% in the following month of sale, and the remainder in the second month following the month of sale. There are no bad debts.
Required:
1. The budgeted accounts receivable balance on September 30 is:
A) $126,000
B) $148,000
C) $166,000
D) $190,000
2. The budgeted cash receipts for October are:
A) $188,000
B) $248,000
C) $226,000
D) $278,000
3. Pitkins Company collects 20% of a month's sales in the month of sale, 70% in the month following the sale, and 6% in the second month following the sale. The remainder is uncollectible. Budgeted sales for the next four months are:
| January | February | March | April | |
|---|---|---|---|---|
| Budgeted sales | $200,000 | $300,000 | $350,000 | $250,000 |
Cash collections in April are budgeted to be:
A) $321,000
B) $313,000
C) $320,000
D) $292,000
Expert Answer:
Intermediate Financial Management
ISBN: 978-1285850030
12th edition
Authors: Eugene F. Brigham, Phillip R. Daves
