Answer and Explanation:
The preparation of cash collection budget is shown below:-
Cash Collection Budget
For the month of January through March
January February March Quarter
Cash sales $43,500 $37,500 $58,500 $139,500
Collection on Credit sales
20% month of sale $20,300 $17,500 $27,300 $65,100
40% month after $33,600 $40,600 $35,000 $109,200
24% two months after $17,640 $20,160 $24,360 $62,160
Total Cash collection $115,040 $115,760 $145,160 $375,960
Working Note 1
November December January February March
Total Sales $105,000 $120,000 $145,000 $125,000 $195,000
Cash sales $31,500 $36,000 $43,500 $37,500 $58,500
Credit sales $73,500 $84,000 $101,500 $87,500 $136,500
Credit sales is 70% of Total sales every month
Cash Sales is 30% of Total sales every month
Working Note 2
January February March Quarter
Cash sales $43,500 $37,500 $58,500 $139,500
Cash collection from credit sales of
November $17,640 $17,640
December $33,600 $20,160 $53,760
January $20,300 $40,600 $24,360 $85,260
February $17,500 $35,000 $52,500
March $27,300 $27,300
Total collections $115,040 $115,760 $145,160 $375,960
