Budgeted Cash Collections, Budgeted Cash Payments
Historically, Ragman Company has had no significant bad debtexperience with its customers. Cash sales have accounted for 20percent of total sales, and payments for credit sales have beenreceived as follows:
40 percent of credit sales in the month of the sale
35 percent of credit sales in the first subsequent month
20 percent of credit sales in the second subsequent month
5 percent of credit sales in the third subsequent month
The forecast for both cash and credit sales is as follows.
| January | $185,000 |
| February | 185,000 |
| March | 193,000 |
| April | 195,000 |
| May | 220,000 |
Required:
1. What is the forecasted cash inflow forRagman Company for May?
$
2. Due to deteriorating economic conditions,Ragman Company has now decided that its cash forecast shouldinclude a bad debt adjustment of 2 percent of credit sales,beginning with sales for the month of April. Because of this policychange, what will happen to the total expected cash inflow relatedto sales made in April? (CMA adapted)
Cash will   by $.
