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XYZ Co has forecast sales in Jan of $200,000 and that they will increase by 5% each month.
All sales are on credit, and 60% of customers pay after 1 month and the rest paying after 2 months.What cash receipt from customers will be budgeted for in May?
Please could you show me the workings for this, answer is £227,115. Thanks
Think i can help with this one. What is asked is the money we are going to receive from rec in may ( not the rec value for may!) therefore all rec from jan & feb are already received and in may you are going to receive the 40% of MAR sales (200 x (1.05^2) x40%) = $88,200 and the 60% of APR sales (200 x (1.05^3) x 60%)= $138,915. Therefore the cash collected from rec in May= 88200+139915=$227,115
I don’t understand how in April its 60% of the customers, and March 40%??? Thanks
The question says that 60% pay after 1 month, and 40% pay after 2 months.
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