BUDGETING LECTURE PROBLEMS
Example #1 (module 1)
Peak sales for Midwest Products, Inc. occur in August. The company’s sales budget for the third quarter
showing these peak sales is given below:
July August September
Budgeted sales ………… $600,000 $900,000 $500,000
From past experience, the company has learned that 20% of a month’s sales are collected in the month of sale,
that another 70% is collected in the month following sale, and that the remaining 10% is collected in the
second month following sale. Sales in May totaled $430,000 and sales in June totaled $540,000.
REQUIRED: (1) Prepare a schedule of expected cash collections from sales by month
for the third quarter
(2) Calculate the budgeted (pro forma) accounts receivable balance at
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