Question

Samson Corporation has found that 70% of its sales in any given month are credit sales, while the remainder are cash sales. Of the credit sales, Samson Corporation has experienced the following collection pattern: November sales for last year were $110,000, while December sales were $115,000. Projected sales for the next three months are as follows: 20% received in the month of the sale 40% received in the month after the sale 25% received two months after the sale 15% of the credit sales are never received January sales.... ............$ 160,000 February.sales ............... $ 125,000 March sales .................$ 200,000 Requirement Prepare a cash collections budget for the first quarter, with a column for each month and for the quarter. (Round your answers to the nearest whole dollar.) Samson Corporation Cash Collections Budget For the Months of January through March January February March Quarter Cash sales Collections on credit sales: 20% Month of sale 40% Month after 25% Two months after Total cash collections

Answer 1

Solution

Samson Corporation
Cash collection budget
For the Month of January through March
	January	February	March	Quarter
Cash Sales	$ 48,000	$ 37,500	$ 60,000	$ 145,500
Collection on credit sales:
20% on Month of sale	$ 22,400	$ 17,500	$ 28,000	$ 67,900
40% Month after	$ 32,200	$ 44,800	$ 35,000	$ 112,000
25% Two Months after	$ 19,250	$ 20,125	$ 28,000	$ 67,375
Total cash collection	$ 121,850	$ 119,925	$ 151,000	$ 392,775

Working

	November	December	January	February	March
Totals sales	$ 110,000	$ 115,000	$ 160,000	$ 125,000	$ 200,000
Cash sales (Total sales x 30%)	$ 33,000	$ 34,500	$ 48,000	$ 37,500	$ 60,000
Credit sales (total sales - Cash sales)	$ 77,000	$ 80,500	$ 112,000	$ 87,500	$ 140,000