Kingston budgets total sales for June and July of $480,000 and $478,000, respectively. Cash sales are 60% of total sales. Of the credit sales, 20% are collected in the month of sale, 65% are collected during the first month after the sale, and the remaining 15% are collected in the second month after the sale. Determine the amount of accounts receivable reported on the company's budgeted balance sheet as of July 31. Hint: Determine the percent of June and July sales that are uncollected at July 31. As of July 31 Sales month Total Sales Credit Sales Percent Uncollected Amount Uncollected June July Total $ 480,000 478,000

Kingston budgets total sales for June and July of $480,000 and $478,000, respectively. Cash sales are 60% of total sales. Of the credit sales, 20% are collected in the month of sale, 65% are collected during the first month after the sale, and the remaining 15% are collected in the second month after the sale. Determine the amount of accounts receivable reported on the company's budgeted balance sheet as of July 31. Hint: Determine the percent of June and July sales that are uncollected at July 31. As of July 31 Sales month Total Sales Credit Sales Percent Uncollected Amount Uncollected June July Total $ 480,000 478,000

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter8: Budgeting For Planning And Control

Section: Chapter Questions

Problem 34E: A companys sales for the coming months are as follows: About 20 percent of sales are cash sales, and...

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Shalimar Company manufactures and sells industrial products. For next year, Shalimar has budgeted the follow sales: In Shalimars experience, 10 percent of sales are paid in cash. Of the sales on account, 65 percent are collected in the quarter of sale, 25 percent are collected in the quarter following the sale, and 7 percent are collected in the second quarter after the sale. The remaining 3 percent are never collected. Total sales for the third quarter of the current year are 4,900,000 and for the fourth quarter of the current year are 6,850,000. Required: 1. Calculate cash sales and credit sales expected in the last two quarters of the current year, and in each quarter of next year. 2. Construct a cash receipts budget for Shalimar Company for each quarter of the next year, showing the cash sales and the cash collections from credit sales. 3. What if the recession led Shalimars top management to assume that in the next year 10 percent of credit sales would never be collected? The expected payment percentages in the quarter of sale and the quarter after sale are assumed to be the same. How would that affect cash received in each quarter? Construct a revised cash budget using the new assumption.
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