The management team of Magnificent Modems, Inc. (MMI), wants to investigate the effect of several different growth rates on sales and cash receipts. Cash sales for the month of January are expected to be $10,000. Credit sales for January are expected to be $50,000. MMI collects 100 percent of credit sales in the month following the month of sale. Assume a beginning balance in accounts receivable of $48,000.

Required

Calculate the amount of sales and cash receipts for the months of February and March assuming a growth rate of 1 percent, 2 percent, and 4 percent. The results at a growth rate of 1 percent are shown as an example.

Use the following forms, assuming a growth rate of 2 percent.

Use the following forms, assuming a growth rate of 4 percent.

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Sales Budget Jan Feb Mar Cash sales Sales on account $10,000 50,000 $10,201 51,005 S10,100 50,500 Total budgeted sales $60,000 S60,600 $61,206 Schedule of Cash Receipts Current cash sales $10,000 48,000 S10,100 50,000 $10,201 Plus collections from accts. rec. 50,500 Total budgeted collections $58,000 S60,100 $60,701