[nanat]

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?

When you respond, please use the answer box at the bottom of the page rather than the comments box. It gives you a lot more space to write. If you will be patient and work through this with me, it will make a lot more sense to you. Thanks.