Teva Sandals' sales for the next three months are as follows: $$\begin{array} { l l }
\text { February } & \$ 130,000 \
\text { March } & \$ 170,000 \
\text { April } & \$ 200,000
\end{array}$$ Collection history for the company indicates that 60% of sales are collected in the month of the sale, 36% is collected in the following month, and 4% of sales are uncollectible.
How much are budgeted cash receipts for April?

Question

Teva Sandals' sales for the next three months are as follows: $$\begin{array} { l l } 
\text { February } & \$ 130,000 \
\text { March } & \$ 170,000 \
\text { April } & \$ 200,000
\end{array}$$ Collection history for the company indicates that 60% of sales are collected in the month of the sale, 36% is collected in the following month, and 4% of sales are uncollectible.
How much are budgeted cash receipts for April?

Quizplus · Accepted Answer

April sales are $200,000. 60% of this amount, or $120,000, will be collected in April. 36% of March sales, or $61,200 (0.36 x $170,000), will also be collected in April. Therefore, total budgeted cash receipts for April are $181,200 ($120,000 + $61,200).

Teva Sandals' Sales for the Next Three Months Are as Follows