Asha sells goods entirely on credit.In respect of sales in any given month she expects 40% to be paid for in the next following month, 40% in the month after that, 15% in the month after that and the remainder in the month after that. Budget data relating to 6 months of Asha's sales are as follows:
Asha is currently preparing her cash flow forecast for June.How much should be included as forecast credit sales receipts for that month?

Question

Asha sells goods entirely on credit.In respect of sales in any given month she expects 40% to be paid for in the next following month, 40% in the month after that, 15% in the month after that and the remainder in the month after that. Budget data relating to 6 months of Asha's sales are as follows:
 Asha is currently preparing her cash flow forecast for June.How much should be included as forecast credit sales receipts for that month?

Quizplus · Accepted Answer

To calculate the credit sales receipts for June, we need to understand how much of Asha's total sales from 6 months are expected to be paid in June.

According to the given information:
- 40% of the sales from any given month are expected to be paid for in the next following month
- Therefore, the sales from the current month (June) will not be included in the expected receipts for June
- 40% of the sales from the previous month (May) are expected to be paid in June
- 15% of the sales from two months ago (April) are expected to be paid in June
- The remainder of the sales from three months ago (March) are expected to be paid in June
- From the budget data, we can calculate the total sales from March, April, and May

Total sales from March, April, and May:
= £43,400 + £45,840 + £42,240
= £131,480

Expected receipts from May sales:
= 40% of £45,840
= £18,336

Expected receipts from April sales:
= 15% of £42,240
= £6,336

Expected receipts from March sales:
= Remaining amount after taking into account May and April receipts
= £131,480 - £18,336 - £6,336
= £106,808

Total expected credit sales receipts for June:
= Receipts from May sales + Receipts from April sales + Receipts from March sales
= £18,336 + £6,336 + £106,808
= £131,480

Therefore, the answer is B) £13,829.

Asha Sells Goods Entirely on Credit