Diamond Corporation has the following sales budget for the last six months of 20X0: $$\begin{array} { l r l r }
\text { July } & \$ 100,000 & \text { October } & \$ 90,000 \
\text { August } & 80,000 & \text { November } & 100,000 \
\text { September } & 110,000 & \text { December } & 94,000
\end{array}$$ Historically, the cash collection of sales has been as follows: 65% of sales collected in month of sale
25% of sales collected in month following sale
8% of sales collected in second month following sale
2% of sales are uncollectible
_____ is the expected cash collection in October.
A)$58,500
B)$92,400
C)$99,500
D)None of these answers is correct

Question

Diamond Corporation has the following sales budget for the last six months of 20X0: $$\begin{array} { l r l r } 
\text { July } & \$ 100,000 & \text { October } & \$ 90,000 \
\text { August } & 80,000 & \text { November } & 100,000 \
\text { September } & 110,000 & \text { December } & 94,000
\end{array}$$ Historically, the cash collection of sales has been as follows: 65% of sales collected in month of sale
25% of sales collected in month following sale
8% of sales collected in second month following sale
2% of sales are uncollectible
_____ is the expected cash collection in October.
A)$58,500
B)$92,400
C)$99,500
D)None of these answers is correct

Quizplus · Accepted Answer

The expected cash collection in October includes 65% of October sales, 25% of September sales, and 8% of August sales. Calculating: (65% of $90,000) + (25% of $110,000) + (8% of $80,000) = $58,500 + $27,500 + $6,400 = $92,400.

Diamond Corporation Has the Following Sales Budget for the Last