A company is working on their budgets for the year 2021. The table below has a few of their expectations for 2021. Accounts Receivable on January 1 Sales in January Sales in February Sales in March Sales in April $35,221 $50,735 $54,654 $58,517 $59,497 Historically, this company's collection pattern for sales has been 16% as cash sales and 84% on account. The sales on account get collected 75% one month following the sale and the remainder two months following the sale. The Accounts Receivable on January 1 is the result of credit sales in December 2020 and thus is expected to be collected according to the sales on account pattern (75%/25%). How much should this company expect in Cash Collections for the month of January? (round to the nearest whole dollar/input code 0)
Master Budget
A master budget can be defined as an estimation of the revenue earned or expenses incurred over a specified period of time in the future and it is generally prepared on a periodic basis which can be either monthly, quarterly, half-yearly, or annually. It helps a business, an organization, or even an individual to manage the money effectively. A budget also helps in monitoring the performance of the people in the organization and helps in better decision-making.
Sales Budget and Selling
A budget is a financial plan designed by an undertaking for a definite period in future which acts as a major contributor towards enhancing the financial success of the business undertaking. The budget generally takes into account both current and future income and expenses.
Cash collection budget :— This budget is prepared to estimate the collection of accounts receivable from customers during the period. Total sales is the sum of cash sales and credit sales. Cash collection is the sum of cash sales and collection from credit sales.
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