The Model Company is to begin operations in April. It has budgeted April sales of $30,000, May sales of $34,000, June sales of $40,000, July sales of $42,000, and August sales of $38,000. Note that 10% of each month's sales will represent cash sales; 75% of the balance will be collected in the month following the sale, 17% the second month, 6% the third month, and the balance is bad debts. What is the amount of cash to be collected in the month of July?

Question

Isai Arnold

Business

5 June, 16:17

The Model Company is to begin operations in April. It has budgeted April sales of $30,000, May sales of $34,000, June sales of $40,000, July sales of $42,000, and August sales of $38,000. Note that 10% of each month's sales will represent cash sales; 75% of the balance will be collected in the month following the sale, 17% the second month, 6% the third month, and the balance is bad debts. What is the amount of cash to be collected in the month of July?

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Answers (1)

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Izabelle Matthews · Answer 1

so Budgeted cash collections in June is $121500

Explanation:

given data

sale in month R1 = 15% = 0.15

sale month following R2 = 75% = 0.75

sale second month R3 = 5% = 0.05

sale uncollectible R4 = 5% = 0.05

Sales April A = $ 198,000

Sales May M = $ 117,000

Sales June J = $ 159,000

to find out

Budgeted cash collections in June

solution

we will find june Budgeted cash so

we will apply here formula that is

june collection = J * R1 : M * R2 : A * R3

put all value we get june collection

june collection = 159,000 * 0.15 + 117,000 * 0.75 + 198,000 * 0.05

june collection = 121500

so Budgeted cash collections in June is $121500