Question

Apr. 25, 2019 Use veur time winel iest The follewing information pertaies to the nest 2 qeestions. Fiscal Compay has the following sales bedget for the next four months of 2017 $250,000 $200,000 July Aug $275,000 $225,000 September October Historically, B0% of sales ane made on eredir (and 20% for cash) The normal eollection pattern of gredit.sales has been 65 pereent in menth of sale, 25 percent in month follewing sale, and 10 pereent in the second month folloing sale 1. Cash collections for September are espected to be $203,000 h S173,400 $255,000 4$253 750

Answer 1

1.

Answer: a

Since this is the calculation for September, the previous two months (July and August) are also to be considered.

Cash collection for September

	July	August	September
Total sales	$250,000	$200,000	$275,000
Less: Cash sales (@ 20%)	250,000 × 0.20 = 50,000	200,000 × 0.20 = 40,000	275,000 × 0.20 = 55,000
Credit sales (CS)	200,000	160,000	220,000
Cash collection:
65% of September CS			220,000 × 0.65 = 143,000
25% of August CS			160,000 × 0.25 = 40,000
10% of July CS			200,000 × 0.10 = 20,000
			Total = 203,000