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hi,could you please explain the above question which is in the revision kit under the budgetary process chapter???
the following details have been extracted from receivable collection records of c co
invoices paid in the month of sale 60%
invoices paid in the second month after sale 25%
invoices paid in the third month after sale 12%
bad debts 3%invoices are issued on the last day of each month .customers paying in the month are entitled to deduct a 2% settlement discount.credit sales values for june to september are budgeted as follows
june july august september
35000 40000 60000 45000
what is the amount budgeted to be received from credit sales in september?You obviously have an answer to this in your Revision Kit, so please in future ask about whatever it is in the answer that you are not clear about 🙂
Also, you have copied out the question wrongly – 60% is for invoices paid in the month after sale, and the 2% discount is for customers paying in the month after sale!!!
So….in September they will receive 60% of Augusts sales (because they will be paid in the month after sale), but only 98% of the amount. So the amount received is 98% x 60% x 60,000.
In addition they will receive 25% of Julys sales (because they are paid in the second month after sale). So the amount is 25% x 40,000.
In addition they will receive 12% of Junes sales (because they are paid in the third month after sale). So the amount is 12% x 35,000.
Add the three together and you have your answer 🙂
Have you not watched my free lectures on cash budgets? The lectures are a complete free course and cover everything needed to pass the exam well.
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