Question

The following is the sales budget for Profit, Inc., for the first quarter of 2018: Sales budget January February March $212,000 $232,000 $255,000 Credit sales are collected as follows: 70 percent in the month of the sale 15 percent in the month after the sale 15 percent in the second month after the sale The accounts receivable balance at the end of the previous quarter was $96,000 ($66,000 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.) a. November sales b. December sales January cash collections February cash collections March cash collections

Answer 1

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Ans a)	Computation of November sales
	December account receivable balance =				96000
	off which AR balance of December sales =				66000
	AR balance for November sales				30000
	this 30000 is 15% if the November sales
	therefore November sales = 30000/15%				200000
Ans b)	December sales = 66000/30%				220000
Ans c)
	Month	Nov	Dec	Jan	Feb	March
	Sales	200000	220000	212000	232000	255000
	Cash sales =	140000	154000	148400	162400	178500
	15%Collected in nxt mth		30000	33000	31800	34800
	15%Collected in nxt to nxt mth			30000	33000	31800
	Total cash collection			211400	227200	245100