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The Gardner Company expects sales for October of $248,000. Experience suggests that 45% of sales are...

The Gardner Company expects sales for October of $248,000. Experience suggests that 45% of sales are for cash and 55% are on credit. The company collects 50% of its credit sales in the month of sale and 50% in the month following sale. Budgeted Accounts Receivable on September 30 is $67,000. What is the amount of cash expected to be collected in October?

  • $111,600.

  • $178,600.

  • $246,800.

  • $179,800.

  • $124,000.

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Answer #1

Gardner Company Cash Budget Total sales during the month of OctoberS248,000 Cash Sales (45%) Credit Sales (55%) S 111,600 S 136,400 It was given that 50% of Credit sales was collected during the month and balance in next month, threfore Cash Collection for October Amount Cash Sales (Calculated above) Cash collected for Credit sales- October (136,400 x 50%) Cash collected for Credit sales- September Total Cash collected 111,600 68,200 67,000 $ 246,800 Answer Cis correct

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Answer #2

$248,000 * 45% (cash sales)

= $111,600 collected cash during month of October - answer is A


[All cash sales are to be collected within month of October, the information regarding percentage of credit sales are irrelevant to the question.]

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