Chapter 14, Problem 14.12E

To determine

Budget: It is forward looking exercise which the company takes by preparing estimated revenues, costs and resources needed by company for a period. It can be prepared for single period or for multiple periods

Cash Budget: The amount of budgeted cash inflows and cash outflows are calculated in preparing the Cash budget

The estimated cash receipts of sales for the month of September, October and November

The estimated cash receipts of sales for the month of September, October and Novemberis given below

  

The following information is required to calculate cash receipts of sales for the month of September, October and November

• The sales amount for the month of July, august, September, October, November and December is $98,000, $105,000, $114,000, $94,000, $122,000 and $107,000

• The cash collection of sales are 30% of sales amount on the month of sales, the following month 55% will be collected and 10% the following month means the sales amount of July of $98,000 will be collected as follows

1. 30% of $98,000 will be collected in July
2. 55% of $98,000 will be collected in August
3. 10% of $98,000 will be collected in September

The cash receipt of sales amount from July, August, September, October and November is calculated as under

  

The total cash receipts for the month of September, October and November is $101,750, $101,400 and $99,700 respectively

The total cash receipts for the month of September, October and November is $101,750, $101,400 and $99,700 respectively