Armidale Innovations operations manager, Henry, prepared the following sales budget for the selected months of 2017:
Month Cash Sales ($) Credit Sales ($)
January 161,000 681,000
February 201,000 801,000
March 181,000 741,000
April 241,000 921,000
May 221,000 761,000
Cash collections history of the company shows that 41% of all credit sales are collected in the month of sale, 46% are collected in the month following the month of sale, and 11% is collected two months following the month of sale. The remaining 2% is uncollectible and treated as ‘bad debts’.
Required: You work under Henry who asks you to prepare a schedule of cash collections for March, April and May, 2017, showing the total for the three months in the ‘total’ column.
Must use the following format/table (show supporting calculations/working separately before or after the format/table):
March April May Total
Cash Sales …………………….
Collections from credit sales: From current month ………..
From previous month ………
From two months back ……..
Total collections (cash & credit):