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Budgeting Cash Collections Lowell Consulting, which sells on terms 2/10,n/30, had credit sales for March and April of $200,00
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Answer #1

The term 2/10 means that 2% discount will be given to customers if they make the payment within 10 days of the invoice date.

Cash collected in April from customers

Within discount

March sale = (200,000 -2%of 200,000)*20%

= 196,000*20%

= $39,200

April sale = (180,000 - 2%of 180,000)*40%

= 176,400*40%

= $70,560

Beyond discount

March sale = 200,000*10%

= 20,000

April sale = 180,000*25%

= 45,000

Therefore total cash payment received will be

= 39,200 + 70,560 + 20,000 + 45,000

= $174,760

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