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Hi Sir,
Could you explain to me:
Forcast sales in Jan of $200,000 will increase 5% each month, sales are on credit. 60% of customers pay after 1 month and rest pay after 2 months.
What cash receipt from customers will be budgeted in May?
The cash receipt in May will be 60% of April’s sales, plus 40% of March’s sales.
April sales are 200,000 with 3 months increase, so 200,000 x (1.05)^3 = 231525
March sales are 200,000 with 2 months increase, so 200,000 x (1.05)^2 = 220500So cash receipts is (60% x 231525) + (40% x 220500) = 227115.
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