Schedule of Expected Cash Collections

Schedule of expected cash collections from customers shows the budgeted cash collections on sales during a period. It is a component of master budget and it is prepared after the preparation of sales budget and before the preparation of cash budget.

The calculation of expected cash collections is based on the total sales figure obtained from sales budget. The management estimates the proportion in which sales are expected to be collected in the current and following periods. This is used to determine how much sales are expected to be collected during a period.

Format and Example

The master budget of Company A continues here with the preparation of schedule of expected cash collections. The sales figures are obtained from the sales budget of the company. 70% of sales are expected to be collected in the quarter in which sales are made and the rest are expected to be collected in the next period. Bad debts are negligible.

a) Q1 Sales = $120,120

    Collections in Q1 = $120,120 × 70% = $84,084;    Collections in Q2 = $120,120 × 30% = $36,036

b) Q2 Sales = $87,768

    Collections in Q2 = $87,768 × 70% = $61,438;      Collections in Q3 = $87,768 × 30% = $26,330

c) Q3 Sales = $106,991

    Collections in Q3 = $106,991 × 70% = $74,894;    Collections in Q4 = $106,991 × 30% = $32,097

d) Q4 Sales = $197,792

    Collections in Q4 = $197,792 × 70% = $138,454

Company A
Schedule of Expected Cash Collections
For the Year Ending December 30, 2010
Beginning AR$62,130   $62,130
Quarter 1 Sales (a)84,084$36,036  120,120
Quarter 2 Sales (b) 61,438$26,330 87,768
Quarter 3 Sales (c)  74,894$32,097106,991
Quarter 4 Sales (d)   138,454138,454
Total Collections$146,214$97,474$101,224$170,551$515,463

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