The LaPann Company has obtained the following sales forecast data: July August September October
Cash sales $80,000 $70,000 $50,000 $60,000
Credit sales 240,000 220,000 180,000 200,000
The regular pattern of collection of credit sales is 20% in the month of sale, 70% in the following the month of sale and the remainder in the second month following the month of sale. There are no bad debts.
Required:
1. The budgeted accounts receivable balance on September 30 is:
A) $126,000
B) $148,000
C) $166,000
D) $190,000
2. The budgeted cash receipts for October are:
A) $188,000
B) $248,000
C) $226,000
D) $278,000
3. Pitkins Company collects 20% of a month's sales in the month of sale, 70% in the month following sale and 6% in the second month following sale. The remainder is uncollectible. Budgeted sales for the next four months are:
January February March April
Budgeted sales $200,000 $300,000 $350,000 $250,000
Cash collections in April are budgeted to be:
A) $321,000
B) $313,000
C) $320,000
D) $292,000