Question

Problem 4. (10 Points) Josh 2.0 is attempting to forecast Cash Collections from his new business venture. Sales are on Credit and for Cash. Josh expects 50% of all sales to be cash and collected in the month of sale. The other 50 % will be on credit and collected as follows: 60% the month after the sales, 30 % 2 months after the sale, and 10 % 3 months after the sale. Based upon he following projected sales, forecast Josh 2.0's cash collections for January to June 020: January 2020 is the first month of operations. Jan Feb May June Mar April s $10,000 $25,000 $35,000 $25,000 $15,000 $0 norgistored e i linded to detiled for o

Answer 1

Answer:

| Jan $5,000 Feb $15,500 Mar $26,500 April $27,250 May $21,500 June $10,000 Total Cash collections

Working:

| Jan | $10,000 Feb $25,000 Mar $35,000 April $25,000 May $15,000 June $0 Sales Credit sales (CS = 50% * Sales) $5,000 $12,500 $17,500 $12,500 $7,500 $0 $5,000 $12,500 $17,500 $12,500 $7,500 $0 Cash Collections: Cash Sales (50% * Sales) Collections Of Credit sales: Following month (60% * CS) After 2 months (30% *CS) After 3 months (30% *CS) Total Cash collections $3,000 $7,500 $1,500 $10,500 $3,750 $500 $27,250 $7,500 $5,250 $1,250 $21,500 $4,500 $3,750 $1,750 $10,000 $5,000 $15,500 $26,500