Question

The Model Company is to begin operations in April. It has budgeted April sales of $46,000, May sales of $50,000, June sales of $56,000, July sales of $58,000, and August sales of $54,000. Note that 10% of each month's sales is expected to represent cash sales; 75% of the balance is expected to be collected in the month following the sale, 17% the second month, 6% the third month, and the balance is expected to be uncollectible.

What is the amount of cash to be collected in the month of July?

Multiple Choice

• $48,082.

• $53,734.

• $59,000.

• $53,110.

Answer 1

Correct Answer:

Cash collected in the month of July

$ 53,734.00

Working:

	April	May	June	July	August
budgeted sales	$ 46,000	$ 50,000	$ 56,000	$ 58,000	$ 54,000
Total cash sales (10% of budgeted sales)	$ 4,600	$ 5,000	$5,600	$ 5,800	$ 5,400
Total credit sale (budgeted sale – cash sales)	$ 41,400	$ 45,000	$ 50,400	$ 52,200	$ 48,600

Cash collected in the month of July
Total cash sale in the month of July	$    5,800.00
75% of Total credit sale for the month of June	$ 37,800.00
17% of the total credit sale for the month of May	$    7,650.00
6% of the total credit sale for the month of April	$    2,484.00
Cash collected in the month of July	$ 53,734.00

End of answer.

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