ExpertMedium2 marksShort Answer
ACCA · Question 23 · D. Budgeting
A retail chain is preparing its cash budget for the first quarter. Budgeted sales are as follows:
- January: $100,000
- February: $120,000
- March: $150,000
Historically, 40% of sales are cash sales collected in the month of sale. The remaining 60% are credit sales, which are collected in full in the month following the sale.
Calculate the total cash receipts budgeted for the month of March.
(Enter the numeric value only, without commas or currency symbols)
A retail chain is preparing its cash budget for the first quarter. Budgeted sales are as follows:
- January: $100,000
- February: $120,000
- March: $150,000
Historically, 40% of sales are cash sales collected in the month of sale. The remaining 60% are credit sales, which are collected in full in the month following the sale.
Calculate the total cash receipts budgeted for the month of March.
(Enter the numeric value only, without commas or currency symbols)
How to approach this question
Calculate March cash sales (40% of March sales) and add the cash collected from February's credit sales (60% of February sales).
Full Answer
Cash receipts in March come from two sources:
1. Cash sales in March: 40% of $150,000 = $60,000.
2. Credit sales from February collected in March: 60% of $120,000 = $72,000.
Total cash receipts in March = $60,000 + $72,000 = $132,000.
Common mistakes
Calculating 60% of March sales instead of February sales, or including January sales incorrectly.
Practice the full ACCA MA — Management Accounting Practice Exam 5
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