Q1. Big City Manufacturing (BCM) is preparing its cash budget and expects to have sales of...

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Q1. Big City Manufacturing (BCM) is preparing its cashbudget and expects to have sales of $450,000 in January, $375,000in February, and $555,000 in March. If 20% of the sales arefor cash, 45% are credit sales paid in the month after the sale,and another 35% are credit sales paid 2 months after the sale, whatare the expected cash receipts for March?
1a. In problem 1, Big City Manufacturing (BCM) assumedthat all credit sales were paid in full, which is notrealistic. BCM studied its past credit sales and determinedthat 3.25% of its credit sales resulted in Bad Debts that werenever collected. Using the data from the previous problemwith the new assumption that 3.25% of credit sales were nevercollected, what is your revised estimate for the expected cashreceipts for March?

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4.3 Ratings (864 Votes)

Month	Jan	Feb	Mar
Sales	4,50,000.00	3,75,000.00	5,55,000.00
Cash Sales	90,000.00	75,000.00	1,11,000.00
Credit Sales Reciept + 1 month		2,02,500.00	1,68,750.00
Credit Sales Reciept + 2 Months			1,57,500.00
Total Cash Receipt	90,000.00	2,77,500.00	4,37,250.00

Month	Jan	Feb	Mar
Sales	4,50,000.00	3,75,000.00	5,55,000.00
Cash Sales	90,000.00	75,000.00	1,11,000.00
Credit Sales	3,60,000.00	3,00,000.00	4,44,000.00
Good Credit Sales	3,48,300.00	2,90,250.00	4,29,570.00
Assumptions
1. (45/80)% of credit sales in 1st Month
2. (35/80)% of credit sales in 2nd Month
Credit Sales Reciept + 1 month		1,95,918.75	1,63,265.63
Credit Sales Reciept + 2 Months			1,52,381.25
Total Cash Reciept	90,000.00	2,70,918.75	4,26,646.88

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Q1. Big City Manufacturing (BCM) is preparing its cashbudget and expects to have sales of $450,000 in January, $375,000in February, and $555,000 in March. If 20% of the sales arefor cash, 45% are credit sales paid in the month after the sale,and another 35% are credit sales paid 2 months after the sale, whatare the expected cash receipts for March?1a. In problem 1, Big City Manufacturing (BCM) assumedthat all credit sales were paid in full, which is notrealistic. BCM studied its past credit sales and determinedthat 3.25% of its credit sales resulted in Bad Debts that werenever collected. Using the data from the previous problemwith the new assumption that 3.25% of credit sales were nevercollected, what is your revised estimate for the expected cashreceipts for March?