Question

The following is the sales budget for Profit, Inc., for the first quarter of 2018:

	January			February			March
Sales budget	$	216,000		$	236,000		$	259,000

Credit sales are collected as follows:

65 percent in the month of the sale

30 percent in the month after the sale

5 percent in the second month after the sale

The accounts receivable balance at the end of the previous quarter was $100,000 ($70,000 of which was uncollected December sales).

a.	Calculate the sales for November. (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
b.	Calculate the sales for December. (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
c.	Calculate the cash collections from sales for each month from January through March. (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.)

Answer 1

a.
Uncollected November sales at the end of previous quarter = Accounts receivables balance at the end of previous quarter - Uncollected December sales = 100000 - 70000	30000
Sales for November = Uncollected November sales at the end of previous quarter / % Uncollected = 30000 / 5%	600000.00

b.
Sales for December = Uncollected December sales at the end of previous quarter / % Uncollected = 70000 / 35%	200000.00

c.
Cash collections from sales :	January	February	March
65% of current month sales	140400 [ 216000*65% ]	153400 [ 236000*65% ]	168350 [ 259000*65% ]
30% of previous months sales	60000 [ 200000*30% ]	64800 [ 216000*30% ]	70800 [ 236000*30% ]
5% of sales made 2 month ago	30000 [ 600000*5% ]	10000 [ 200000*5% ]	10800 [ 216000*5% ]
Cash collections	230400.00	228200.00	249950.00