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2 January, 10:28

Question 2. (cash receipts from sales) Budgeted sales revenue for the coming five months is as follows: Month Sales revenue August $195,000 September $165,000 October $135,000 November $100,000 December $120,000 You estimate that you will collect 45% of sales revenue in the month of sale, 40% in the following month, 5% two months after the sale, and the remaining 10% three months after the sale.

Compute budgeted cash inflows for November and December.

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  1. 2 January, 10:53
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    November = $126,750

    December = $117,250

    Explanation:

    Giving the following information:

    Month Sales revenue:

    August $195,000

    September $165,000

    October $135,000

    November $100,000

    December $120,000

    You estimate that you will collect 45% of sales revenue in the month of sale, 40% in the following month, 5% two months after the sale, and the remaining 10% three months after the sale.

    Cash collection November:

    From August = 0.10*195,000 = 19,500

    From September = 165,00*0.05 = 8,250

    From October = 135,00*0.4 = 54,000

    From November = 100,000*0.45 = 45,000

    Total = 126,750

    Cash collection December:

    From September = 165,00*0.10 = 16,500

    From October = 135,00*0.05 = 6,750

    From November = 100,000*0.40 = 40,000

    From December = 120,000*0.45 = 54,000

    Total = $117,250
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