Question

Chec M8-14 (Algo) Preparing Schedule of Cash Receipts [LO 8-4) Getty Company expects sales for the first three months of next year to be $180,000, $230,000 and $290,000, respectively. Getty expects 20 percent of its sales to be cash and the remainder to be credit sales. The credit sales will be collected as follows: 10 percent in the month of the sale and 90 percent in the following month Compute a schedule of Getty's cash receipts for the months of February and March February March Budgeted cash receipts

Answer 1

	February	March
Cash sales	230,000 x 20% = 46,000	290,000 x 20% = 58,000
Collection from January credit sales	144,000 x 90% = 129,600	0
Collection from February	184,000 x 10% = 18,400	184,000 x 90% = 165,600
Collection from March credit sales	0	232,000 x 10% = 23,200
Total Budgeted cash receipts	$194,000	$246,800

Credit sales of January = 180,000 x 80%

= $144,000

Credit sales for February = 230,000 x 80%

= $184,000

Credit sales for March = 290,000 x 80%

= $232,000

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