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Getty Company expects sales for the first three months of next year to be $200,000, $235,000, and $298,000, respectively. Getty expects 35 percent of its sales to be cash and the remainder to be credit sales. The credit sales will be collected as follows: 60 percent in the month of the sale and 40 percent in the following month. Prepare a schedule of Getty’s cash receipts for the months of February and March.

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phamdiep1810

Answer:

Getty’s cash receipts for the months of February: $225,900

Getty’s cash receipts for the months of March: $281,620

Explanation:

Cash sales:

In January = 35% x $200,000 = $70,000

In February = 35% x $235,000 = $82,250

In March = 35% x $298,000 = $104,300

Credit Sales:

In January = 65% x $200,000 = $130,000

In February = 65% x $235,000 = $152,750

In March = 65% x $298,000 = $193,700

Getty’s cash receipts for the months of February = Cash sales of February + 40% x Credit sales of January + 60% x Credit sales of February = $82,250 + 40% x $130,000 + 60% x $152,750 = $225,900

Getty’s cash receipts for the months of March = Cash sales of March + 40% x Credit sales of February + 60% x Credit sales of March = $104,300 + 40% x $152,750 + 60% x $193,700 = $281,620

anthougo

The preparation of the Cash Receipts Schedule for the months of February and March for Getty Company is as follows:

                                       February          March

Cash sales (35%)           $82,250        $104,300

Cash collection:

60% month of sale           91,650           116,220

40% following month     52,000              61,100

Total cash receipts   $225,900        $281,620

What is a cash budget?

A cash budget is a budget or forecast of cash receipts and cash payments within a period.

Cash budgets are prepared as decision tools to help managers make cash decisions.

Data and Calculations:

                                 January         February         March

Expected Sales     $200,000       $235,000     $298,000

Cash sales (35%)       70,000            82,250        104,300

Credit sales (65%)   130,000           152,750        193,700

Cash collection:

60% month of sale   78,000             91,650         116,220

40% following month                       52,000           61,100

Learn more about the cash budgets at bhttps://brainly.com/question/8707644

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