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East Company budgeted the following credit sales during the current year: August $85,000 September, $100,000; October,...

East Company budgeted the following credit sales during the current year: August $85,000 September, $100,000; October, $108,000; November, $80,000; December, $100,000. Experience has shown that cash from credit sales is received as follows: 20% in the month of sale, 60% in the first month after sale, 16% in the second month after sale, and 4% is uncollectible. All collections in the month of sale are subject to 1 percent cash discount.

How much total cash can East Company expect to collect in November?

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Answer #1
Schedule of Cash Collection in November
20% of November sales (80,000 x 20%) 16,000
Less: Cash discount (16,000 x 1%) -160
Cash collection for November Sales $15,840
60% of October sales (108,000 x 60%) 64,800
16% of September sales (100,000 x 16%) 16,000
Total cash collection in November $96,640

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