Spacely Sprockets' Sales Budget Shows the Following Expected Total Sales

question 1

Essay

Spacely Sprockets' sales budget shows the following expected total sales:
$$\begin{array} { l l } \text { Month } & \text { Sales } \\\text { January } & \$ 30,000 \\\text { February } & \$ 40,000 \\\text { March } & \$ 35,000 \\\text { April } & \$ 30,000\end{array}$$ The company expects 80% of its sales to be on account (credit sales).Credit sales are collected as follows: 30% in the month of sale and 68% in the month following the sale,with the remainder being uncollectible and written off in the month following the sale.
Required:
a)Calculate budgeted accounts receivable at the end of each month from February through April.
b)Calculate budgeted cash inflows from collection of receivables for each month from February through April.

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Definitions:

Accrued Liabilities

Accrued liabilities are financial obligations that a company has incurred but has not yet paid or recorded in its financial statements.

Direct Method

A cost allocation method that assigns service department costs directly to producing departments without any intermediate allocations.

Cash Basis

An accounting method where revenues and expenses are recognized only when cash is received or paid.

Operating Activities

Business activities that relate directly to the production, sale, and delivery of a company's products or services, generating revenue.