Zhang Industries sells a product for $650. Unit sales for May were 600 and each month's sales are expected to grow by 4%. Zhang pays a sales manager a monthly salary of $4,000 and a commission of 3% of sales in dollars. Assume 40% of Zhang's sales are for cash. The remaining 60% are credit sales; these customers pay in the month following the sale. Compute the budgeted cash receipts for June.

Budgeted cash receipts for June:

Receipt from Sales: June equals $396,240, equivalent to $162,240 (624 x $650 x 40%)  for June and $234,000 (600 x $650 x 60%) received from May.

Explanation:

The budgeted cash receipts for June take into consideration the following:

a) June sales increased by 4% from May's, which is equal to 624 (600 x 1.04).

b) Only 40% of the sales proceed is received in June.

c) 60% of the May proceed is receivable in June.

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