Dove Corporation began its operations on September 1 of the current year. Budgeted sales for the first three months of business are $235,000, $307,000, and $421,000, respectively, for September, October, and November. The company expects to sell 25% of its merchandise for cash. Of sales on account, 70% are expected to be collected in the month of the sale and 30% in the month following the sale.
The cash collections expected in October are
a.$265,920
b.$280,320
c.$218,920
d.$290,800
Answer
--Correct Answer = Option 'D' $ 290,800
October | |
Cash sales from October ($3070000 x 25%) | $76,750 |
Cash from Credit sales of: | |
September ($235000 x 75% x 30%) | $52,875 |
October ($307000 x 75% x 70%) | $161,175 |
Total Cash collections | $290,800 Answer |
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