Sales budget
January February March
Sales in units 6,000 6,500 7,000
Sales in dollars $120,000 $130,000 $140,000


Sales consist of 70% cash and 30% credit. All credit accounts are collected in the month following the sales. Bad debts are negligible and can be ignored. Actual sales for December 2010 were $110,000.

Prepare a cash collections budget on sales for January, February and March 2011.

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nanat does not find this helpful : i dont understand
Just so you know, giving this red mark is considered an insult on this board. They should only be used if someone gave a factually incorrect answer. I'll help you but I won't do all of the work. You have to be willing to work for the answer.

Your problem states that sales are 70% cash and 30% credit. First compute the 70% that is paid in each month. The 30% credit is paid in the following month. Compute that amount. For example, they tell you that December sales were $110,000. We know that 30% of that amount will be collected in January, so $33,000 is collected. We also know that 70% of the estimated sales for January are expected to be collected in January. How much is that? What is the total that is expected to be collected in January?

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