Caribbean Tool and Die Company's forecasted sales for April, May, June and July are $150,000, $225,000, $180,000, and $210,000, respectively. Sales are 50% cash and 50% credit with all accounts receivables collected in the month following the sale. Cost of goods sold is 60% of sales and ending inventory is maintained at $85,000 plus 20% of the following month's cost of goods sold. All inventory purchases are paid 20% in the month of purchase and 80% in the following month.
What are the cash collections budgeted for June?

Question

Quizplus · Accepted Answer

June's cash collections include 50% of June's sales in cash ($180,000 * 50% = $90,000) plus collections of May's credit sales (50% of May's $225,000 = $112,500). Total = $90,000 + $112,500 = $202,500.

Caribbean Tool and Die Company's Forecasted Sales for April, May