Question

Question 1 [6] The mobile phone franchise industry has adopted a social media marketing strategy. This marketing strategy has an ongoing monitoring plan. Despite project costs, management reported significant increase on sales. The sales figures for the first six months are captured as follows: March: R5 000 000 January: R6 000 000 April: R7 000 000 February: R3 000 000 May: R8 000 000 June: R9 000 000 As part of the strategy to further increase sales, the marketing team proposed that 40% of the sales are done in cash and remainder on credit. Credit sales are collected as follows: • 40% is collected in the month of sales . . 40% is collected one month after the month of sales The remainder is collected in the second month following the month of sales Required: Calculate the total credit collections from credit sales for April, May, and June

Answer 1

The collection on credit sales table were as folllows:

Particulars	April	May	June
20% of February Month Credit Sale	360,000	-	-
40% of March Month Credit Sales	1,200,000	-	-
20% of March Month Credit Sales	-	600,000	-
40% of April Month Credit Sales	1,680,000	-	-
40% of April Month Credit Sales	-	1,680,000	-
20% of April Month Credit Sales	-	-	840,000
40% of May Month Credit Sales	-	1,920,000	-
40% of May Month Credit Sales	-	-	1,920,000
40% of June Month Credit Sales	-	-	2,160,000
Net Collection	3,240,000	4,200,000	4,920,000

Credit Sales
Januray	3,600,000
February	1,800,000
March	3,000,000
April	4,200,000
May	4,800,000
June	5,400,000

Here credit Sales found by 60% of total sales in each month. Question mentioning that 40% sales as cash and 60% is Credit Sales

Then 40% of credit Sales in the month of sales occured

Then 40% of credit Sales in the next month of sales occured

Then 20% of Credit Sales in 2nd month of sales occured.