I would REALLY appreciate any help you could give me with this problem:

Sales
May 60,000
June 70,000
July 80,000
August 100,000
All sales are on credit. Records show that 60 percent of the customers pay during the month of the sale, 20 percent pay the month after the sale, and the remaining 15 percent pay the second month after the sale. 5% are uncollectable.

Prepare a cash collections budget for July and August.

Thanks so much!:confused:

July Cash Collections
July sales = 80,000 * .6 = 48,000
June sales = 70,000 * .2 = 14,000
May sales = 60,000 * .15 = 9,000
TOTAL CASH COLLECTIONS IN JULY = 71,000

August Cash Collections
August sales = 100,000 * .6 = 60,000
July sales = 80,000 * .2 = 16,000
June sales = 70,000 * .15 = 10,500
TOTAL CASH COLLECTIONS IN AUGUST = 86,500

Why is it important to prepare cash budget?

Companies need to know how much cash is coming in and go out in a period, so they will know if they will have enough cash onhand to pay employees, make loan payments, take advantage of special purchases on merchandise, etc... Also they will know ahead of time when they will need to get a loan if needed to get a good interest rate, or when they might be able to take on a special project like renovations, equipment upgrades, etc...