ICAEW BIP · Chapter 7 · Question 4 of 10
Budgeted sales are January £80,000, February £90,000 and March £100,000. Customers pay as follows: 20% in the month of sale, receiving a 2% discount for prompt payment 50% in the month after sale 28% in the second month after sale 2% are irrecoverable debts What are the budgeted cash receipts for March?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: A) £87,000
Explanation
March sales: £100,000 x 20% x 98% = £19,600. February sales: £90,000 x 50% = £45,000. January sales: £80,000 x 28% = £22,400. Total receipts = £87,000. Irrecoverable debts are never received, and the discount reduces the cash collected from March's cash sales.
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