XYZ Company produces and sells chairs. Monthly budgeted sales are as follows:
June 450
July 500
August 300
September 480
October 430
The ending inventory of finished goods is 5% of the next month's budgeted sales. 10% of sales are budgeted as cash sales and the remaining sales are budgeted as credit sales. According to the company records, 40% of credit sales are collected in the same month, 35% are collected in the next month, 22% are collected two months after the sale, and remaining are uncollectible. If company is selling 1 chair for $150, then calculate total cash received in September.

Question

Quizplus · Accepted Answer

Budgeted Cash Receipts = Budgeted Cash Sales + Budgeted Collections on Credit Sales = (480 × $150 × 10%) + (500 × $150 × 90% × 22%) + (300 × $150 × 90% × 35%) + (480 × $150 × 90% × 40%) = $7,200 + $14,850 + $14,175 + $25,920 = $62,145.

XYZ Company Produces and Sells Chairs