Bright Minds Toy Company prepared the following sales budget for the second quarter. Projected sales for each of the first three months of operations are as follows: $\begin{array}{lccc}
\text { Sales Budget } & \text { April } & \text { May } & \text { June } \
\text { Cash sales } & 30,000 & 43,000 & 55,000 \
\text { Sales on account } & \underline{ 370,000 }& \underline{432,000 }& \underline{ 405,000}\
& \underline{400,000}& \underline{475,000}& \underline{460,000}
\end{array}$

- Bright Minds expects to collect 70% of the sales on account in the month of sale, 20% in the month following the sale, and the remainder in the second month following the sale.
What is the amount of budgeted cash collections for June?

Question

Bright Minds Toy Company prepared the following sales budget for the second quarter. Projected sales for each of the first three months of operations are as follows: $\begin{array}{lccc}
\text { Sales Budget } & \text { April } & \text { May } & \text { June } \
\text { Cash sales } & 30,000 & 43,000 & 55,000 \
\text { Sales on account } & \underline{ 370,000 }&  \underline{432,000 }& \underline{ 405,000}\
& \underline{400,000}& \underline{475,000}& \underline{460,000}
\end{array}$

- Bright Minds expects to collect 70% of the sales on account in the month of sale, 20% in the month following the sale, and the remainder in the second month following the sale.
What is the amount of budgeted cash collections for June?

Quizplus · Accepted Answer

To calculate the budgeted cash collections for June, we first need to calculate the total sales for April, May, and June:

April sales: $350,000 x 70% = $245,000
May sales: $400,000 x 70% = $280,000
June sales: $450,000 x 70% = $315,000

Next, we need to calculate the collections for each of these months based on the given collection percentages:

April collections: $245,000 x 20% = $49,000
May collections: ($245,000 x 80%) + ($280,000 x 20%) = $196,000 + $56,000 = $252,000
June collections: ($245,000 x 0%) + ($280,000 x 80%) + ($315,000 x 20%) = $0 + $224,000 + $63,000 = $287,000

Finally, we add up the collections for June to get the total budgeted cash collections for that month:

$49,000 + $252,000 + $287,000 = $461,900

Therefore, the best choice is B, with the explanation outlined above.

Bright Minds Toy Company Prepared the Following Sales Budget for the Second