# Schedule of expected Cash Collections

Anonymous

Question description

Schedule of Expected Cash Collections. Smith distributes silk ties. Create a Master Budget for the second quarter, April - June 2014. Smith desires a minimum ending cash balance each month of \$11,000. The ties ae sold to retailers for \$9 each. Recent and forcasted sales in units are as follows:

January (actual) . . . . . . . . . 20,000

February (actual) . . . . . . . . 24,000

March (actual) . . . . . . . . . . 28,000

April . . . . . . . . . . . . . . . . . . 35,000

May . . . . . . . . . . . . . . . . . . 45,000

June . . . . . . . . . . . . . . . . . . 60,000

July . . . . . . . . . . . . . . . . . . 40,000

August . . . . . . . . . . . . . . . 36,000

September . . . . . . . . . . . . . 32,000

The large build-up in sales before and during June is due to Father's Day. Ending inventories are supposed to equal 90% of the next month's sales in units. The ties cost the company \$5 each.

Purchases are paid for as follows: 50% in the month of purchases and the remaining 50% in the following month. All sales are on credit, with no discount, and payable within 15 days. The company has found, however, that only 25% of a month's sales are collected by month-end. An additonal 75% is collected in the following month. Bad debts have been negligible. I'm trying to figure where I went wrong for my cash budget.

 February Sales 54,000 0 0 54,000 March Sales 189,000 63,000 0 252,000 April Sales 78,750 236,250 78,750 393,750 May Sales 0 101,250 202,500 303,750 June Sales 0 0 135,000 135,000 Total Cash Collections 321,750 400,500 416,250 1,138,500

Feb ((24,000 x 9)) x 25% = 54,000

Mar ((28,000 x 9)) x 75% = 189,000&   ((25% x 28,000) x 9 = 63,000

April ((35,000 x 25%)) x 9 = 78,750&   ((75% x 9)) x 35,000 = 236, 250

May ((25% x 9)) x 45,000 = 101,250 &  2 x 101,250=202, 500

June ((60,000 x 25%)) x 9 = 135,000

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