Question

Exercise 10.33 Novak Inc. has budgeted sales for the second quarter of $300,000 for April; $500,000 for May; and $600,000 for June. Normally, 20 % are cash sales and 80% of sales are on account. As well, 30% of the sales on account are normally collected during the month of sale, 50% in the following month, and 20 % in the second month following sale. The accounts receivable balance as of April 1 is $250,000. Prepare the schedule of cash collections for the second quarter by month and in total. (Round intermediate calculations and final answers to 0 decimal places, e.g. 15 or 15%. ) Cash Collection Schedule Apr. May Jun. Quarter Total planned sales $ Credit sales Cash sales $ $ $ Credit sales collected during month Credit sales collected one month later Credit sales collected two months later April 1st A/R collected during month April 1st A/R collected following month

Answer 1

Cash collections budget
	April	May	June	Quarter
Total planned sales	$ 3,00,000	$                       5,00,000	$ 6,00,000	$ 14,00,000
Credit sales	$ 2,40,000	$                       4,00,000	$ 4,80,000	$ 11,20,000
Cash Sales	$     60,000	$                       1,00,000	$ 1,20,000	$   2,80,000
30% in the month of sale	$     72,000	$                       1,20,000	$ 1,44,000	$   3,36,000
50% month after		$                       1,20,000	$ 2,00,000	$   3,20,000
20% Two month after			$     48,000	$       48,000
April 1st A/R collected during month	$ 1,78,571
April 1st A/R collected following month		$                           71,429
Total cash collected	$ 3,10,571	$                       4,11,429	$ 5,12,000	$   9,84,000
Workings:
	April	May	June
Sales	$ 3,00,000	$                       5,00,000	$ 6,00,000
Cash Sales (20%)	$     60,000	$                       1,00,000	$ 1,20,000
Credit Sales (80%)	$ 2,40,000	$                       4,00,000	$ 4,80,000
April 1st A/R collected during month	=	(250000/70%) X 50%	=	$   1,78,571
April 1st A/R collected following month	=	(250000/70%) X 20%	=	$       71,429