Question

Plato Industries' projected sales for the first six months of 2012 are given below:
Jan $250,000

Feb $340,000

Mar.$280,000

April $300,000

May $350,000

June $380,000

20% of sales are collected in cash at time of sale, 50% are collected in the month following the sale, and the remaining 30% are collected in the second month following the sale. Cost of goods sold is 85% of sales. Purchases are made in the month prior to the sales, and payments for purchases are made in the month of the sale. Total other cash expenses are $70,000/month. The company's cash balance as of February 28, 2012 will be $10,000. Excess cash will be used to retire short-term borrowing (if any). Plato has no short term borrowing as of February 28, 2012. Ignore any interest on short-term borrowing. The company must have a minimum cash balance of $40,000 at the beginning of each month. What is Plato Industries' total cash receipts for April 2012?

A$340,000

B$326,000

C$302,000

D$300,000

Answer 1

Ans.	Option   C   $302,000
	Particulars	Amuont
	From February sales	$102,000
	From March sales	$140,000
	From April sales	$60,000
	Total cash collection in April	$302,000
	Calculation of Cash collections:
		April
	From February sales	$340,000 * 30%
	From March sales	$280,000 * 50%
	From April sales	$300,000 * 20%