The management team of Perez Modems, Inc. (PMI) wants to investigate the effect of several...
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The management team of Perez Modems, Inc. (PMI) wants to investigate the effect of several different growth rates on sales and cash receipts. Cash sales for the month of January are expected to be $120,000. Credit sales for January are expected to be $600,000. PMI collects 100 percent of credit sales in the month following the month of sale. Assume a beginning balance in accounts receivable of $576,000 Required Calculate the amount of sales and cash receipts for the months of February and March assuming a growth rate of 2 percent and 4 percent. The results at a growth rate of 1 percent are shown as an example. Sales Budget Feb Mar Cash sales $120,000 $121,200 $122,412 Sales on account 600,000 606,000 612,360 Total budgeted sales $720,000 $727,200 $734,472 Schedule of Cash Receipts Current cash sales $120,000 $121,200 $122, 412 Plus collections from accounts receivable 576,000 600.000 600,000 Total budgeted collections $696,000 3721,200 $720,412 Use the following forms, assuming a growth rate of 2 percent and 4 percent
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