Problem 9-26 Sales and Cash Collections Budgets Mountain Mashproduces ice cream for wholesale distribution to grocers,restaurants, and independent ice cream shops. March, April, May,June, and July are busy months for the company as its customersgear up for the spring and summer rush. Mountain Mash has projectedthe following level of sales (in gallons) for March through July:The company has a set wholesale selling price of $3.50 per gallon.Mountain Mash’s customers purchase ice cream on credit, with theagreement that they must pay invoices within 30 days. Nonetheless,not all customers pay within that time frame. Mountain Mash’scredit manager has developed the following table to show thetypical cash collection pattern: Required: A. Prepare a salesbudget for March, April, May, June, and July. When required, roundanswers to the nearest cent. Mountain Mash Sales Budget March AprilMay June July Budgeted sales (gallons) Selling price per gallon $ $$ $ $ Total budgeted sales $ $ $ $ $ B. Prepare a cash receiptsbudget for May, June, and July. Mountain Mash Cash Receipts BudgetMonth Sales May June July March $ $ – – April $ $ $ – May $ $ $ $June $ – $ $ July $ – – $ Total cash receipts from sales $ $ $ C.If sales and cash collections are exactly as the company estimates,how much will customers owe Mountain Mash as of the end of July?$
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